Personal Finance
The Synapse/Evolve Debacle Has Gotten Better and Worse
After several stressful weeks, end users with neobanking accounts that utilized Synapse and had funds held at Evolve Bank & Trust got a few answers in recent days. Unfortunately, not all of those answers were satisfying, leading to even more questions.
Let me back up just in case you missed my previous article explaining the situation. Earlier this year, the “banking-as-a-service” company Synapse filed for bankruptcy. Sometime later, one of the firm’s banking partners, Evolve Bank & Trust, alleged that Synapse had cut off their access to the Dashboard that noted incoming and outgoing transfers. In turn, Evolve discontinued withdrawals from Synapse accounts. This meant that users of apps such as Yotta, Juno, and others could not access their funds. Making matters worse, some users weren’t even aware of Synapse’s involvement in their accounts, instead believing that the apps had direct relationships with the bank.
That brings us to a couple of weeks ago when Evolve sent an email addressed to “end users.” This email announced that the bank had launched a reconciliation site and would soon be allowing customers to see what their “actual” balances were. Then, balances over $100 could be claimed via various methods, while balances under that threshold would automatically be sent using PayPal.
A later email provided users with a unique claim code — which, when entered on the reconciliation site along with the last four digits of the customer’s Social Security number, would display the “Synapse Ecosystem Balance” alongside the “Evolve Payment” amount. Sadly, while these two figures match for some accountholders, others are reporting major discrepancies.
In my case, my Yotta account balance happens to match my Synapse balance, which is also what Evolve observed and paid to me via PayPal. Yet, my Juno account did show a small discrepancy as my Synapse Ecosystem Balance shows $2.65 while my Evolve Payment was just $0.15.
As for others, it seems that these discrepancies and shortcomings are far more stark. For example, a friend of mine had a Yotta balance of more than $300, which is shown as their Synapse Ecosystem Balance. But, their Evolve Payment was $0. Elsewhere, looking on Yotta’s Subreddit and other forums, there are several users complaining that their balances are missing hundreds if not thousands of dollars.
Making matters even more frustrating, there’s currently no real explanation for how these discrepancies occurred — although Evolve clearly points the finger at Synapse. The bank’s open letter also notes that Ankura assisted with the reconciliation. As for users who may be upset about the missing funds, Evolve states, “We appreciate that it might not be what some end users expect, but we are confident in Ankura’s work in reconstructing those balances.”
That said, there is perhaps some hope ahead as Synapse had multiple partner banks. Evolve explains as much, noting, “We know that Evolve is just one piece of the puzzle, and we hope that others will work with us to get a more fulsome picture of which other banks held funds for which end users.” At this time, however, it’s unclear if or when the other institutions in question will offer their own answers or when the affected apps will update their balances accordingly.
Once again, it seems that I’ve emerged from this debacle extremely lucky as 1) I didn’t have much with any affected platform at the time and 2) saw a very minor discrepancy in those funds. However, it breaks my heart to see that so many others continue to see significant portions of their savings tied up in this mess.
What’s perhaps most confusing to me about this whole episode is how to feel about Evolve. Understandably, when the bank froze funds from users, they were quite upset. Similarly, as they log in to see potentially thousands of dollars “missing,” that frustration only grows. Yet, if it is the case that Synapse was working with several banks and that these funds may be held elsewhere, is it actually better that Evolve went through these steps now? That’s hard to say as there are still so many unknowns.
At this point, it is good to know that at least some users are receiving at least a portion of their money back. Alas, it seems it will still be some time before everyone is close to being made whole. In the meantime, one thing is for sure: this entire experience has surely left a bad taste in the mouths of many FinTech consumers — myself included.
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