Will Customers Get Their Money Back From Synapse

A group of U.S. senators urged Synapse’s owners, bank partners, and investors to restore customers' access to their funds. The senators emphasized that companies partnered with Synapse had customer funds frozen since mid-May. The letter was sent to key figures and institutions, including the CEO of Evolve Bank & Trust, venture firms such as Andreessen Horowitz, and various banking partners and fintech companies. Synapse provided embedded banking services for fintechs but filed for Chapter 11 bankruptcy in April and then moved to Chapter 7 by May, freezing customer funds. The senators urged all parties to make deposits available immediately, noting a potential shortfall of $65 to $96 million owed to consumers. They criticized the banking-as-a-service model and pointed out its weaknesses, emphasized by the Synapse bankruptcy. Additionally, Evolve Bank announced a cyberattack affecting data and personal information, impacting companies like Affirm, Mercury, and Stripe. Thread Bank also faced enforcement action from the FDIC.

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