Santiago Peña, Trump's Ally in Paraguay, Resigns After Digital Bank Collapse

Paraguayan President Santiago Peña, a close ally of US President Donald Trump, on Thursday announced his resignation after a major digital bank with close ties to his government collapsed, freezing millions of customers' savings, sparking mass protests, and spurring the lower house of the South American country's Congress to unanimously impeach him.

“I have made the decision to submit my resignation as president of the republic,” Peña declared in a video posted on social media. “I do so thinking of the stability of our country, social peace, and the need to preserve our democratic institutions.”

"I wish to apologize to the people," he said. “It was never my intention to betray the trust they placed in me.”

Minutes after Peña's announcement, lawmakers in the Chamber of Deputies—the lower house of Paraguay's Congress—voted 78-0 to impeach the president. Charges were then sent to the Senate, which must now decide whether to try him, given the evidence and considering his resignation. Conviction would require the votes of 30 of 45 upper chamber's lawmakers.

Paraguay's crisis centers on Ueno Bank, a fast-growing digital lender whose operations were suspended after the country's Central Bank intervened over a severe capital shortfall. The bank had approximately 2.9 million customers in a country of just over 6 million people, leaving much of the population adversely affected by the collapse.

In the streets of the capital Asunción, furious residents demanded their money back and accountability for the officials responsible for the collapse. Police responded by firing rubber-coated steel bullets and pepper spray in a bid to disperse demonstrators.

“Santiago Peña and the Colorado Party have stolen all our savings,” protester Luis Pineda told The Associated Press. “We are fed up with 70 years of plunder.”

Peña's departure marks a dramatic setback for the right-wing Colorado Party, which has governed the country for most of the past seven decades, including during the genocidal, US-backed military dictatorship of Gen. Alfredo Stroessner.

Another protester decried what he called “yet another assault on honest, hard-working citizens; people whose small savings are the fruit of years of labor."

Ueno Bank reportedly held approximately $800 million in public deposits, including money belonging to the country's social security and health funds and operators of major hydroelectric dams. Peña's previously had financial connections to the Ueno-linked Grupo Vázquez. He also appointed Carlos Carvallo, the former head of Ueno's predecessor company, to lead the Central Bank of Paraguay, which was responsible for supervising Ueno.

Prosecutors have charged 27 Ueno Bank officials and associates with alleged crimes including breach of trust and attempted fraud. Six executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale, were ordered jailed pending trial, while two others were placed under house arrest.

Peña was among Trump's closest allies in Latin America, enthusiastically embracing two of the US president's signature but highly controversial international initiatives. In January 2026, he became a founding member of Trump's so-called Board of Peace, initially established to oversee Gaza's postwar reconstruction.

In March, Peña joined fellow right-wing regional presidents, including Javier Milei of Argentina, Nayib Bukele of El Salvador, and Daniel Noboa of Ecuador ,at the inaugural Shield of the Americas summit at Trump's Doral resort in Florida.

"Peña’s rapid fall from power comes on the heels of the Democratic Party’s massive victory in Tuesday’s US midterms elections, Brazilian President Luiz Inácio Lula da Silva’s surprise reelection in Brazil the week before, and plummeting approval ratings of recently elected Trump-aligned presidents across South America," observed Lee Schlenker, a researcher at the Quincy Institute for Responsible Statecraft.

"These trends all point toward a shift in the regional balance of power that has produced unprecedented levels of ideological alignment across the Western Hemisphere," he added.