Synapse and Evolve Face $85 Million Shortfall in Fintech Meltdown

Jun 7, 2024, 07:08 PM

Synapse, a banking as a service provider, is embroiled in a significant financial scandal involving an $85 million discrepancy in customer funds. Former FDIC Chair Jelena McWilliams revealed the gap in a status report, noting that Synapse's partner banks hold less than what end users are owed. Synapse cofounder and CEO Sankaet claims that at the time of the company's wind down, the gap was $43 million, suggesting awareness of the issue since September 2023. Evolve, the old banking partner, and fintech startups are also implicated. The bankruptcy trustee has recommended partial payouts to affected customers, but the regulatory framework to enforce this is lacking. The situation has left impacted depositors in a regulatory black hole with no agency stepping in to resolve the issue. A hearing on the matter is scheduled.