Institutional flaws exposed by Koriun case worsen Xiomara Castro’s credibility crisis

The pyramid scheme run by Koriun Inversiones has rocked Honduras at a time of institutional decline and political polarization. With more than 35,000 people affected, mainly in working-class areas in the north of the country, the case has not only exposed the fragility of the financial supervision system, but has also presented Xiomara Castro’s government with one of the most complex challenges of her term in office.

The unsupervised management and downfall of the plan

For many years, Koriun Inversiones functioned unlawfully, offering a 20% monthly profit without official registration or oversight by the National Banking and Insurance Commission (CNBS). In spite of public alerts released by this body in February 2025, indicating that the firm was not permitted to collect money from the public, the activities persisted without governmental interference until the Technical Agency for Criminal Investigation (ATIC) and the Public Ministry took action in April that year.

The raids uncovered the extent of the scam: over 358 million lempiras in cash was confiscated, along with 69 million frozen in bank accounts. The inquiries determined that there were no legitimate investments to support the promised profits, validating that it was a non-viable pyramid scheme.

Responses from society and political consequences

The impact of the collapse has been profound, both socially and politically. Thousands of people lost their savings, leading to demonstrations, roadblocks, and protests in different parts of the country, especially in Choloma, where most of the investors were concentrated. The crisis has fueled public discontent with the inaction of local authorities and the gaps in the regulatory system.

Políticamente, el caso ha afectado negativamente la percepción sobre el gobierno. Las críticas se han centrado en la falta de supervisión institucional, la permisividad que permitió a Koriun operar abiertamente y la carencia de medidas preventivas por parte de las agencias responsables. Los sectores empresariales y las organizaciones de la sociedad civil han cuestionado duramente la debilidad del estado para prevenir fraudes de este tipo.

The executive’s proposal and the controversy

Due to public pressure, the administration declared the creation of legislation to reimburse the impacted individuals, utilizing funds from the nation’s budget. This proposal, mandated by President Xiomara Castro, has sparked significant reactions both in the National Congress and the general populace.

Opposition sectors and citizen groups have rejected the measure, arguing that public money is being used to cover the costs of a private scam, which they consider a dangerous precedent that could encourage impunity and the political exploitation of citizens’ suffering. Despite the official announcement, the bill has not yet been thoroughly discussed, nor has the amount of compensation or its implementation mechanism been defined.

The suggestion has increased conflicts among legislative groups and put the government in a precarious situation, being criticized for both its lack of anticipation and its crisis management approach.

Dangers faced by institutions and political forecasts

The Koriun case calls into question the Honduran state’s ability to guarantee legal certainty and protect citizens from financial fraud. The lack of timely oversight, the permissiveness with which the company operated, and the government’s delayed response have reinforced the perception of institutional inefficiency.

Internationally, the situation could affect the country’s image as a safe destination for investment, while domestically, the handling of the case has contributed to a narrative of erosion that is already affecting the ruling party on other fronts. Amid other allegations of corruption, the Koriun scandal threatens to become yet another symbol of the lack of transparency and state control.

Xiomara Castro’s government thus faces a complex dilemma: responding to a legitimate social crisis without jeopardizing institutional credibility or exacerbating the climate of polarization. How this situation is handled will be decisive for its political stability and for the level of trust that citizens maintain in public institutions.