Fintech

Yotta CEO says 85,000 bank accounts have been blocked

Published

11 months ago

1 June, 2024

Oscar Wong | Moment | Getty Images

The crisis began on May 11, when a dispute between two of Yotta’s banking partners: fintech intermediary Synapses and based in Tennessee Evolve Bank and Trust – led to the freezing of the accounts of Yotta and at least two dozen other startups. Synapse declared failure earlier this year, after several key clients left the company due to disagreements over tracking client funds.

Over the past three weeks, 85,000 Yotta customers with combined savings of $112 million have been locked out of their accounts, Moelis told CNBC. The outage has upended lives, forced users to borrow money for food and cast doubt on upcoming events such as surgeries or weddings, she said.

“The stories are heartbreaking,” Moelis said. “We never imagined that something like this could happen. We have been working with banks that are members of the FDIC. We never imagined that a scenario like this could happen and that no regulator would step in to help us.”

The ongoing chaos has highlighted risks in a fintech sector that has become increasingly important during a boom in venture capital investing – and will likely reverberate for years as regulators increase scrutiny of the industry.

The so-called “banking as a service” model has allowed consumer fintech companies to quickly launch savings accounts and debit services, with companies like Synapse acting as a bridge between the startups and the FDIC-backed banks that ultimately hold the deposits .

The heart of the dispute between Synapse and Evolve Bank concerns a fundamental function of finance: keeping accurate records of transactions and balances. Synapse and Evolve disagree about how much Yotta funds are held at Evolve and how much are held at other banks Synapse has worked with.

Synapse did not respond to requests for comment, while Evolve did blamed Synapse breaking.

Synapse’s failure has mostly ensnared lesser-known consumer fintech companies, especially after larger fintech players, including Mercury AND Dave has fled the Synapse platform over the past year.

This made Yotta, which encouraged users to save money with free weekly lottery-style sweepstakes, one of the largest companies to be affected. Accounts at a cryptocurrency company Juno it’s at Copperthat offered savings accounts for families and teenagers were frozen.

Moelis, who has been in contact with other fintech executives affected by Synapse’s failure, estimates that at least 200,000 total customer accounts with balances are frozen. Although Synapse said in court filings that it has 10 million end users, active accounts are likely to be much smaller, Moelis said.

Adam Moelis, co-founder of Yotta Savings.

Courtesy: Yotta

The fintech co-founder said he believed the relatively limited scope of the problem and the fact that most of those affected are not wealthy gave regulators permission to let the situation play out. Last year, regulators intervened promptly in the regional banking crisis that threatened the uninsured deposits of startups and wealthy families, he noted.

“In my opinion, if this were happening on a larger scale, I think the regulators would have done something by now,” he said. “We have real, everyday Americans who aren’t necessarily wealthy and don’t have the ability to lobby and who are being affected.”

The Federal Reserve and the Federal Deposit Insurance Corp. declined to comment on the matter. Agency representatives pointed out efforts they have done to encourage banks to manage the risks of using fintech partners.

But developments in the California bankruptcy court overseeing Synapse’s bankruptcy give Moelis hope that at least some relief – a partial release of funds, perhaps – may be coming.

Last week, former FDIC Chair Jelena McWilliams was appointed trustee on Sinapsi. His job is to develop a plan to maintain the Synapse systems and create a solution “that allows the funds to be returned to the end users, to the rightful owners of those funds, as soon as humanly possible,” Judge Martin Barash said.

For his part, Moelis said he doesn’t side with either Evolve or Synapse in their dispute — he just wants the situation resolved.

“I don’t know who’s right or who’s wrong,” he said. “We know how much money came into the system and we are confident that it is the correct amount. The money doesn’t just disappear; it has to be somewhere.”

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Yotta CEO says 85,000 bank accounts have been blocked

FinCrypto Staff

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Fintech

Lloyds and Nationwide invest in Scottish fintech AI Aveni

Published

9 months ago

29 July, 2024

FinCrypto Staff

Lloyds and Nationwide invest in Scottish AI fintech Aveni

Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.

The investment is led by Puma Private Equity with additional participation from Par Equity.

Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.

The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.

Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.

“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”

Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.

“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.

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Fintech

Fairexpay: Risk consultancy White Matter Advisory acquires 90% stake in fintech Fairexpay

Published

9 months ago

29 July, 2024

FinCrypto Staff

Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.

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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.

Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.

“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.

The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.

The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

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Fintech

Rakuten Delays FinTech Business Reorganization to 2025

Published

9 months ago

29 July, 2024

FinCrypto Staff

Rakuten (Japan:4755) has released an update.

Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.

For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.

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Fintech

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

Published

9 months ago

29 July, 2024

FinCrypto Staff

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

You are reading Entrepreneur India, an international franchise of Entrepreneur Media.

White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.

This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.

By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.

Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.

The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.

Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.

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