Company type | Private company |
---|---|
Industry | Financial services |
Founded | April 14, 2014 (2014-04-14) |
Founder | Sankaet Pathak |
Defunct | April 2024; 8 months ago (2024-04) |
Fate | Bankrupt |
Headquarters | San Francisco, United States |
Area served | United States |
Key people | Sankaet Pathak (CEO) |
Products | banking as a service to other financial technology companies |
Number of employees | 157 (2024) |
Website | synapsefi |
Synapse Financial Technologies, Inc. was an American banking as a service company. Based in San Francisco, Synapse filed for chapter 11 bankruptcy protection in April 2024.
Synapse claimed to keep customer deposits in FDIC insured bank accounts. However Synapse was not a bank, no bank failed, and the FDIC deposit insurance does not directly protect the depositors of Synapse accounts.
The company was backed by Andreessen Horowitz and had roughly 100 direct business relationships, indirectly serving 10 million retail customers through those relationships.
Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds. In May 2024, former FDIC Chair Jelena McWilliams, appointed as bankruptcy trustee, said there was a “shortfall” between Synapse’s records and those of the banks, estimated at $65 million to $96 million.
The CEO of Yotta Savings – a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits.
As of November 2024, a lawsuit was in progress against four of Synapse's banking partners, seeking class action status in regard to losses by those affected by Synapse's actions.
References
- ^ Kauflin, Jeff (April 1, 2020). "Broken Synapse: Why Employees And Customers Are Fleeing This Andreessen-Backed Fintech Startup". Forbes. Retrieved 2024-11-23.
- Azevedo, Mary Ann (May 25, 2024). "Synapse, backed by a16z, has collapsed, and 10M consumers could be hurt". TechCrunch. Retrieved 2024-11-23.
- ^ Sweet, Ken (May 22, 2024). "Abrupt shutdown of financial middleman Synapse has frozen thousands of Americans' deposits". AP News. Retrieved 2024-11-23.
- ^ Mason, Emily (17 June 2024). "Is Your Money Really Safe In An 'FDIC-Insured' Fintech Account?". Forbes.
- ^ Sweet, Ken (23 May 2024). "Abrupt bankruptcy of financial middleman Synapse freezes bank accounts of tens of thousands of U.S. businesses and consumers". Fortune.
- Weinberger, Evan (June 12, 2024). "Andreessen-Backed Fintech's Meltdown Shows Bank Middlemen Risks". Bloomberg Law.
- Chakravarty, Rajashree (October 30, 2024). "5 lessons learned from Synapse's collapse". Banking Dive. Retrieved November 23, 2024.
- Mason, Emily (24 May 2024). "Synapse Management Ousted As Fintech Customers Remain Frozen Out Of Their Accounts". Forbes.
- Son, Hugh (November 22, 2024). "'I have no money': Thousands of Americans see their savings vanish in Synapse fintech crisis". CNBC. Retrieved 2024-12-11.
- Chakravarty, Rajashree (November 27, 2024). "Synapse partner banks hit with lawsuit over fund mismanagement". Banking Dive. Retrieved 2024-12-16.
External links
- Official website, archived from the original in 2024
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