Fintech
Yotta claims that 85,000 accounts are affected by the synapse collapse
The impact of Synapses bankruptcy continues to spiral, now extending to FinTech startups Yotta.
In the last three weeks, 85,000 of the company’s customers hold a total of 112 million dollars of savings – have been locked out of their accounts, CNBC reported on Sunday (June 2).
The reason? Yotta is in the middle of a dispute between two of its banking partners: Synapse and Evolve Bank & Trust. Founder and CEO of Yotta Adam Moelis he told CNBC that the controversy has forced his clients to borrow money for food and to put on hold major events such as weddings and surgeries.
“The stories are heartbreaking,” Moelis said. “We never imagined something like this could happen. We have worked 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 report states that Yotta is the largest company hit so far by the Synapse bankruptcy.
As PYMNTS wrote last week, Synapse’s problems began — or at least came to light — when the company’s largest customer, Mercury, decided to work directly with Evolve, Synapse’s largest banking partner, eliminating the need for Synapse as an intermediary.
“That trigger a chain of eventsfew of them good, for Synapse’s other customers who relied on the FinTech provider as connective tissue,” the report states.
Synapse filed for Chapter 11 bankruptcy and in April reached an agreement to be acquired by TabaPay, a deal that evaporated in a few weeks. And while the company is now in Chapter 11, several media reports have noted that Synapse could eventually move into Chapter 7, which would result in the company being liquidated.
“THE specter of liquidationwe note, it raises questions about what can be recovered and how long it will take… and what will happen to customers who have relied on the interconnected relationships between Evolve and Synapse,” PYMNTS wrote.
For example, there is Mainvest, which brought together small businesses and investors via its online platform. The company is shutting down its operations and said in a statement on its website that “due to the ongoing dispute between Evolve Bank and Synapse, all payment processing on Mainvest is currently unavailable, including withdrawals and bank connections” .
Copperanother FinTech that used Synapse announced it will shut down at least some of its offerings, including bank deposit accounts and debit cards.
“In terms of the expanded ecosystem, Synapse’s approximately 100 FinTech partners are estimated to have 10 million end customers,” PYMNTS wrote.
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