Close Menu
Invest Intellect
    Facebook X (Twitter) Instagram
    Invest Intellect
    Facebook X (Twitter) Instagram Pinterest
    • Home
    • Commodities
    • Cryptocurrency
    • Fintech
    • Investments
    • Precious Metal
    • Property
    • Stock Market
    Invest Intellect
    Home»Fintech»Synapse’s collapse has frozen nearly $160M from fintech users — here’s how it happened
    Fintech

    Synapse’s collapse has frozen nearly $160M from fintech users — here’s how it happened

    August 22, 20245 Mins Read


    The collapse and bankruptcy of BaaS fintech Synapse has revealed how treacherous things are for the often-interdependent fintech world when one key player hits trouble. 

    Synapse operated a service that allowed others (mainly fintechs) to embed banking services into their offerings. For instance, a software provider that specialized in payroll for 1099 contractor-heavy businesses used Synapse to provide an instant payment feature; others used it to offer specialized credit/debit cards. 

    The San Francisco-based startup raised a total of just over $50 million in venture capital in its lifetime, including a 2019 $33 million Series B raise led by Andreessen Horowitz’s Angela Strange. Synapse wobbled in 2023 with layoffs and filed for Chapter 11 in April of this year, hoping to sell its assets in a $9.7 million fire sale to another fintech, TabaPay. But TabaPay walked. 

    The result was that Synapse has been urged to liquidate entirely under Chapter 7 and a lot of other fintechs such as Juno, Yotta and Yieldstreet — and their customers — are paying the price for Synapse’s demise. 

    The debacle has left observers questioning the banking-as-a-service concept and digital banking as a whole, considering that millions of consumers with nearly $160 million in deposits remain unable to access their funds. 

    Here is a timeline of Synapse’s troubles and the ongoing impact it is having on banking consumers. 

    2024

    Founder raises $11 million for a new startup

    August 22: Sankaet Pathak is full steam ahead on Foundation, his new robotics startup. On X, Pathak said that Foundation’s goal is to “automate GDP through AI and Robotics to free people from labor jobs, allowing them to pursue their passions.” He also on August 20 posted on X that Synapse’s former partner Evolve Bank “needs to start paying out customers and cover the deficit they created.”

    Nearly $160 million in funds still frozen

    July 7: Fintech Business Weekly reports that a recent “status conference in the ongoing Synapse bankruptcy didn’t offer much hope to end users whose funds were still frozen, with efforts to reconcile and release the remaining funds, approximately $158.6 million, appearing to slow.” This means that about $158.6 million was still owed to end users. However, there was an estimated $65 million to $95 million in funds that were missing. 

    Senators urge Synapse and its partners and backers to restore customers’ access to their money

    July 1: A group of senators banded together to urge Synapse’s owners and bank and fintech partners to “immediately restore customers’ access to their money.” As part of their demands, the senators implicated both the partners and the venture investors of the company as being responsible for missing customer funds.

    Synapse CEO moves on to starting another company

    June 12: Synapse’s CEO Sankaet Pathak has reportedly already raised $10 million for a new robotics startup even while questions remained on the whereabouts of $85 million in Synapse’s customer savings.

    Fallout continues, more fintechs and millions of consumers affected 

    May 25: Based on Synapse’s filings, as many as 100 fintechs and 10 million end customers were potentially impacted by the company’s collapse by the end of May. For instance, funds at crypto app Juno and banking platform Yotta were also impacted by Synapse’s collapse. Meanwhile, Mainvest, a fintech lender to restaurant businesses, said it was actually shutting down as a result.

    U.S. trustee pushes for Chapter 7

    May 16: A United States trustee filed an emergency motion to convert Synapse’s debt reorganization Chapter 11 bankruptcy into a liquidation Chapter 7. The trustee said that Synapse had “grossly” mismanaged its estate so that losses were continuing with little “reasonable likelihood of reorganization” that would allow the company to emerge on the other side and carry on.

    Customer teen banking startup Copper discontinues its banking operations

    May 13: Synapse customer teen banking startup Copper had to abruptly discontinue its banking deposit accounts and debit cards as a result of Synapse’s difficulties. That left an unknown number of consumers, mostly families, without access to the funds they had trustingly deposited into Copper’s accounts. 

    Sale of assets called off

    May 9: TabaPay said it had abandoned its plans to purchase Synapse’s assets. There was lots of finger-pointing when that deal dissolved. Synapse’s CEO made accusations that the problem was banking partner Evolve Bank & Trust. And Evolve denied those charges, saying it was not involved, and not to blame. Meanwhile, another player in the saga, Mercury, said Synapse’s allegations had “no merit.”

    Synapse files for Chapter 11 bankruptcy, assets to be sold off for $9.7 million

    April 22: Synapse filed for Chapter 11 bankruptcy and said at that time that its assets would be acquired by instant payments company TabaPay, pending bankruptcy court approval. (Again, TabaPay would walk away from the deal a couple weeks later.)

    2023

    Synapse lays off staff, reports of tension with partner Evolve Bank arise

    October 13: Evolve Bank & Trust and startup digital bank Mercury ended their respective relationships with Synapse and work directly with each other. Evolve and Synapse addressed the brouhaha here.

    October 6: Synapse confirmed that it had laid off 86 people, or about 40% of the company. That was just four months after the company had let go of 18% of its workforce as “the current macroeconomic conditions” had begun to impact its clients and platforms, affecting its anticipated growth. In 2019, TechCrunch reported on the company’s $33 million Series B raise led by Andreessen Horowitz after rebranding from SynapseFi. 

    Note: This article was updated post-publication to clarify that Synapse has not yet converted to Chapter 7.

    Want more fintech news in your inbox? Sign up for TechCrunch Fintech here.

    Want to reach out with a tip? Email me at maryann@techcrunch.com or send me a message on Signal at 408.204.3036. You can also send a note to the whole TechCrunch crew at tips@techcrunch.com. For more secure communications, click here to contact us, which includes SecureDrop (instructions here) and links to encrypted messaging apps.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Asia’s Fintech Revolution: Mobile Banks Are Reshaping Finance

    Fintech

    Private Credit Is Targeting Fintech Loans

    Fintech

    CNBC-TV18 Exclusive | PB Fintech acquires Pensionbazaar.com, say sources

    Fintech

    Karl Deeter-led mortgage and insurance fintech sold to UK plc in up to €9m deal – The Irish Times

    Fintech

    Visa Africa Fintech Accelerator opens applications for fifth cohort, welcomes 22 startups to fourth

    Fintech

    Capitec and Mama Money Launch Fintech Partnership to Empower Migrant Workers Across Africa

    Fintech
    Leave A Reply Cancel Reply

    Top Picks
    Precious Metal

    Outcrop Silver & Gold Corporation étend le système de veines Los Mangos avec de nouvelles intersections à haute teneur, dont 3,86 mètres à 621 g/t d’argent. Équipement

    Cryptocurrency

    Police recover $315,000 stolen from elderly man via cryptocurrency

    Precious Metal

    la Fédération des centres sociaux fait mouche, tilt et strike

    Editors Picks

    Trump to Launch His Own Cryptocurrency Platform

    August 22, 2024

    India’s Threadbare Utilities Are Threatening a Green Energy Boom

    March 4, 2025

    CenterPoint Energy faces lawsuit from Houston restaurants over prolonged power outages

    July 16, 2024

    Wellington man arrested as part of FBI investigation into cryptocurrency scam

    May 15, 2025
    What's Hot

    BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) annonce un plan de rachat d’actions portant sur 2 004 946 actions, soit 2,50 % de son capital social émis. -Le 23 janvier 2025 à 06:00

    January 22, 2025

    AFRICA FINTECH SUMMIT NAIROBI 2024 WELCOMES INTERSWITCH GROUP AS GOLD SPONSOR

    August 21, 2024

    Heiwa Real Estate REIT renouvelle sa ligne de crédit de 8 milliards de yens

    May 23, 2025
    Our Picks

    U.S. Olympic Committee sues Prime, Logan Paul’s energy drink brand, alleging trademark infringement

    July 21, 2024

    Navigating the US Property Market: Insights for UK Buyers Interested in Texas

    August 18, 2024

    Hindustan Copper Limited annonce des changements de président -Le 21 mars 2025 à 13:57

    March 21, 2025
    Weekly Top

    After 10 years, there’s a functioning Metal Gear Solid 5 co-op mod so you and a friend can be played like a damn fiddle together

    August 5, 2025

    Largest sovereign wealth fund in the world to review investments in Israel

    August 5, 2025

    Global race for digital money dominance: Who will set rules for this new era?

    August 5, 2025
    Editor's Pick

    Donald Trump To Host Biggest Holders Of His Cryptocurrency For Dinner

    April 23, 2025

    Exclusive: mBridge open to cooperation with traditional payment infrastructure

    October 24, 2024

    South East ‘most difficult place to sell a property’ – CLAIM

    May 6, 2025
    © 2025 Invest Intellect
    • Contact us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.