A judge in Paraguay on Saturday ordered former President Santiago Peña held in pretrial detention at a military facility while prosecutors investigate his ties to the digital lender ueno, Reuters reported. The order, from Judge Humberto Otazú, capped a week in which the bank's failure froze the accounts of most of the country's adults and ended a presidency.

Peña resigned Thursday and was impeached Friday, the Guardian reported. Vice President Pedro Alliana was sworn in Friday to complete the term, which runs through August 2028.

The charges

Prosecutors charged Peña with breach of trust and administration for personal gain. Each charge could carry up to 10 years, said prosecutor Nancy Salomón. They allege that Peña used his position to influence agencies and state-owned entities to keep large amounts of public money at ueno despite his financial ties to it.

Peña was a shareholder in ueno's holding company until March 2025. He held about $1 million in shares, bought in 2019, in a company that became Ueno Holding in 2022, according to the Guardian. He denies wrongdoing and has said the bank's problems were a regulatory matter. His lawyer, Ricardo Preda, said Peña pleads not guilty. "We will submit to the investigation and I am sure that when this investigation is over the result will be the dismissal," Preda said.

Carlos Carvallo, who resigned as central bank chief this week, was also ordered held. He was charged with breach of trust, producing false public documents and administration for personal gain. Carvallo headed the lender until 2023. Soon after Peña took office that year, he appointed Carvallo, then ueno's chief executive, to lead the central bank. Less than three months later, Carvallo authorized ueno, then a finance company, to become a digital bank.

Eight senior executives and directors of ueno and its controlling group were arrested during the week.

The size of the hole

Paraguay's central bank ordered ueno into resolution over insolvency on Monday night, Nov. 2. The bank had less than half the solvency required to meet its obligations. Nearly 3 million Paraguayans, about 60 percent of the adult population, had their accounts frozen. Ueno held accounts for nearly half of Paraguay's 6.5 million people, France 24 reported.

Public money was deep inside the bank. An estimated $800 million to $860 million in state and pension funds were invested in ueno, according to the Guardian. The Itaipú hydroelectric company said Saturday that it had more than $163 million deposited there and has begun legal action to recover it, BBC Mundo reported. Initial inquiries show state bodies had more than $230 million in the bank as of September.

The damage reached households and shops within days. About 32,000 pensioners whose public pension funds were invested in ueno were left without payments. Businesses reported sales falls of up to 80 percent during the week.

How the guarantee pays

Paraguay's deposit guarantee fund covers deposits up to $38,000, a ceiling that would apply to more than 90 percent of individual account holders, the Guardian reported. On Friday the central bank began paying customers with up to $1,565 who had no outstanding debts and an existing account at another institution.

By Saturday the central bank said the equivalent of $160 million had been paid to nearly 1.2 million savers under the scheme.

What it means for investors

Peña had been described as a market favorite among Latin American presidents. The crisis that ended his term began at one domestic lender, which held accounts for nearly half the population and hundreds of millions of dollars in public and pension money.

The guarantee fund has begun with the smallest balances, and its ceiling covers most individual savers. The state's own money is a separate matter. Itaipú alone had more than $163 million at ueno and has begun legal action to recover it.