Kulipa Collapse Takes Down 120,000 Crypto Cards, Exposing Risks of Third-Party Payment Processing

Kulipa, a Paris-based stablecoin card infrastructure startup, shut down on July 29 due to solvency issues. The collapse took down approximately 120,000 crypto cards overnight, affecting roughly 20 fintech clients, including Solflare and Ready.

The shutdown caused problems for users who had stored funds in their Kulipa cards, but Solflare users were spared because the wallet's card was designed to pull spending directly from users' self-custody wallets at the moment of purchase. This meant that no balance was held at Kulipa.

The collapse serves as a real-time case study on the importance of having proper architecture and design when building financial infrastructure. The incident highlights the potential risks and consequences of relying on third-party services for payment processing.