KAST Terms of Service Treat Crypto Deposits as a Sale

In exchange, users receive a US dollar claim recorded in the app. They can redeem the unspent balance at any time, according to the terms. Still, the “sale” label has raised hard questions about ownership and risk.

KAST launched in July 2024 as a stablecoin-powered card platform. It offers Visa cards across 170-plus countries and up to 3% cashback. The firm markets US dollar accounts backed by stablecoins.

What the KAST Terms of Service Actually Say

KAST published the language in terms effective December 1, 2025. The company then updated the wording in July 2026. According to the terms, any remittance of crypto to KAST “constitutes a transfer of ownership of such assets to KAST.”

In return, KAST records a US dollar payment obligation as a ledger entry. The app calculates it at the market rate at the time of transfer. So the user holds a dollar claim, not the original coins.

The terms also confirm where the money sits. KAST holds the assets with custodians BitGo and Fireblocks. Notably, the terms say custodians secure the assets “on behalf of KAST (not for the users).”

How the Feud Over the Terms Started

The clause stayed quiet for months. Then Ether.fi CEO Mike Silagadze put it in the spotlight in early July 2026. He urged users to read the KAST terms of service and called the model a scam.

On July 7, 2026, Silagadze went further on X. He wrote that “the scammin’ from Kast was so extreme” that he broke his usual rule against attacking rivals. He also warned users about what happens if the company fails.

The Defiant covered the dispute on July 7, 2026. Its report compared the original and updated wording and quoted both CEOs. Coverage noted a split view on whether the structure is standard or risky.

What Deposit as a Sale Means in Bankruptcy

The ownership question matters most if KAST ever goes broke. Because users sell their crypto, they hold a contractual claim, not the coins themselves. As a result, they may rank as unsecured creditors in an insolvency.

Silagadze made that exact point. “If Kast goes bankrupt then account holders are in line with other creditors and behind senior debt,” he wrote. He added that users “would need to wait years” and might never recover their assets.

Unsecured creditors sit near the back of the line. Secured and senior lenders get paid first. So recovery, if any, can take years and rarely returns the full amount.

The Tax Angle Users May Miss

A sale can also trigger tax. In many jurisdictions, disposing of crypto counts as a taxable event. As a result, moving coins to KAST may realize a capital gain or loss, even without cashing out to fiat.

The gain or loss depends on cost basis versus market value at transfer. This is not tax advice, and rules vary by country. Still, users should check local guidance before funding an account.

How KAST Compares to Rivals

Not every crypto card uses this structure. Rivals such as Ether.fi Cash and Gnosis Pay often keep user ownership through non-custodial or trust-based designs. In contrast, KAST takes legal title and runs a single dollar ledger.

Coinbase Card typically converts crypto to fiat at spend, without a blanket “sale to the issuer” clause. KAST argues its model keeps operations simple. Critics argue it shifts legal ownership away from the user.

What KAST Says in Its Defense

Pathy pushed back the same day. In a July 7 thread, the CEO said users always kept redemption rights. He also pointed to custody with BitGo and Fireblocks and a strong balance sheet after the raise.

KAST closed an $80 million Series A in March 2026, co-led by QED Investors and Left Lane Capital. Reports put the valuation near $600 million. Pathy said the team updated the terms “to make this very clear.”

The pushback cuts both ways, though. Silagadze runs a direct competitor in the same card market. So some observers read his warnings as rival pressure rather than pure consumer advocacy.

What Comes Next for KAST Users

No regulator has stepped in so far, and no KAST token exists yet. For now, the fight lives on X, where sentiment has turned sharply negative. The core issue, ownership at deposit, remains unchanged in the KAST terms of service.

Users weighing the app should read the current terms in full and model the worst case. Anyone with a large balance may want to track redemption limits and fees closely. This article is news and analysis, not financial or legal advice.