Synapse Financial

Synapse Financial Technologies, a banking-as-a-service middleware provider, collapsed in April 2024, leaving over 100,000 people without access to more than $265 million held across fintech platforms.¹ The company filed for Chapter 11 bankruptcy after disputes with partner banks and fintech clients, and a failed acquisition by TabaPay.¹³⁵⁶⁸ A court-appointed trustee identified a shortfall of between $65 million and $95 million against customer claims, and the CFPB later alleged Synapse engaged in unfair practices by failing to maintain accurate records.^113141517

Timeline

Money raised

Synapse raised $51 million from two rounds of venture capital funding.⁵ In 2019, Synapse's valuation was $180 million.⁵ At the end of 2022, Synapse claimed to serve 18 million end users and process $76 billion in transaction volume.⁵ TabaPay planned to buy Synapse's assets for $9.7 million.⁵⁸ The shortfall between Synapse's records and bank-held funds was estimated between $60 million and $90 million.¹³¹⁷ The trustee identified a shortfall of between $65 million and $95 million against customer claims.¹¹⁴ The CFPB stated the shortfall may be as high as $95 million.¹⁵

Investors named in the sources: Andreessen Horowitz¹³⁵⁷⁹, CoreVC⁸, Trinity Ventures⁹, Core Innovation Capital⁹, 500 Globals⁹, 9Yards Capital⁹.

What happened

Synapse Financial Technologies was founded in 2014 in San Francisco as a banking app for people without bank accounts.³ It pivoted to provide infrastructure for B2B banking, allowing fintechs to embed banking services into their offerings.³ Synapse acted as a middleware provider, connecting fintech apps with FDIC-insured banks.¹⁵⁷⁸ It did not take deposits directly but reconciled and routed pooled customer funds into omnibus accounts at partner banks.¹ Synapse offered APIs for payment, deposit, lending, and investment products to fintech companies.⁹

It enabled fintechs to issue debit and credit cards, open accounts, process payments, and streamline compliance.¹ Synapse partnered with banks such as Evolve Bank & Trust, AMG National Trust, American Bank, and Lineage Bank.¹⁸¹⁴ By its peak in 2022, Synapse supported over 18 million end users and had $9 billion in assets.³ In 2019, Synapse's valuation was $180 million.⁵ At the end of 2022, Synapse claimed to serve 18 million end users and process $76 billion in transaction volume.⁵

Synapse had contracts with 20 banks and 100 fintechs, resulting in about 10 million end users.⁷ In 2022, Evolve Bank & Trust announced its intention to break from Synapse and withheld a $17 million payment.⁵ Mercury, one of Synapse's largest fintech clients, pulled deposits and ended its contract.¹³⁵ Evolve and Mercury chose to collaborate directly, removing Synapse as the go-between.³⁸ In October 2023, Synapse laid off 40% of its workforce.⁸

As early as September 2023, Synapse's records did not match the records maintained by partner banks.¹³¹⁷ Synapse faced operational difficulties, including layoffs and internal restructuring.³ It struggled with maintaining compliance with regulatory standards.³ On April 22, 2024, Synapse filed for Chapter 11 bankruptcy protection.^1356781316 The bankruptcy filing was intended to facilitate the sale of Synapse's assets to TabaPay.⁶

TabaPay planned to buy Synapse's assets for $9.7 million.⁵⁸ On May 8, 2024, TabaPay pulled out of the deal, citing Synapse's failure to meet closing conditions.⁵⁶⁸ On May 11, 2024, Evolve Bank & Trust froze funds and ceased processing payments after Synapse cut off access to a key system.⁵⁶⁷ The freeze affected users of fintech services such as Yotta, Juno, and Copper.⁵⁷ Customers were unable to access their funds for weeks or months.¹⁵⁷¹³

A court-appointed trustee, Jelena McWilliams, was appointed on May 24, 2024.¹ The trustee reported that all employees of Synapse Brokerage were terminated prior to her appointment.¹ The trustee identified a shortfall of between $65 million and $95 million against customer claims.¹¹⁴ The CFPB filed a complaint against Synapse alleging unfair acts and practices.¹³ The CFPB alleged that Synapse failed to maintain sufficient records of the location of consumers' funds.¹³

The CFPB stated that the shortfall between Synapse's records and bank-held funds was between $60 million and $90 million.¹³ The CFPB filed a proposed stipulated final judgment calling for injunctive relief and a $1 civil money penalty.¹³ On August 21, 2025, the bankruptcy court entered a stipulated final judgment permanently barring Synapse from financial services operations and imposing a $1 civil money penalty.¹⁷ The court's order defined consumer harm as the difference between each consumer's account balance and the amount received in distributions from partner banks.¹⁷ On June 20, 2025, the CFPB filed a statement of interest supporting conversion of the bankruptcy case to Chapter 7.¹⁵

Customers of fintech platforms like Yotta and Juno were locked out of their accounts.⁵⁷⁸ Some customers reported losing all or most of their life's savings.¹³ Many customers were unable to afford food or pay their rent, mortgage, hospital bills, or other bills.¹³ Some customers expressed suicidal ideations due to the financial distress.¹³ Evolve Bank began issuing payments to affected fintech end users in late October 2024.¹⁴

Some customers complained that the amounts they were paid were much lower than what they should have received.¹⁴ As of March 2025, many consumers had not received the full amount of their balances.¹⁷

Legal outcomes

• filedThe CFPB filed a complaint against Synapse Financial Technologies alleging unfair acts and practices in violation of the Consumer Financial Protection Act.¹³
• filedThe CFPB filed a proposed stipulated final judgment that calls for injunctive relief and a $1 civil money penalty.¹³
• settledThe bankruptcy court entered a stipulated final judgment permanently barring Synapse from financial services operations and imposing a $1 civil money penalty.¹⁷
• filedYotta filed a lawsuit against Evolve Bank, reporting misconduct and accusing the financial institution of working with Synapse to misappropriate customer funds.⁸
• filedThe California Department of Financial Protection and Innovation ordered Juno to cease deposit-taking activities and make restitution to its users.⁸
• pendingAttorneys working with ClassAction.org were looking to file a class action lawsuit on behalf of consumers who believe they are not receiving the full amount they are owed.¹⁴

Where the founders are now

Synapse CEO Sankaet Pathak said on X that final ledger reports had been sent to all banks and fintechs.⁵ Pathak conceded that no progress was made with Evolve.⁵ Pathak did not immediately return an email seeking comment from CNBC.⁷

Sources

1. The Synapse Collapse Exposes Why the World Needs Stronger Fintech Regulation (Volume 21, Issue 1) — Yale Journal of International Affairs, Yale Journal of International Affairs
3. What the Synapse BaaS Bankruptcy Means for the Fintech Industry, innreg.com, Jun 28, 20
5. Fintech Fight Leads to Hundreds of Thousands of Frozen Accounts - The American Prospect, The American Prospect, 2024-05-23
6. The Synapse-Evolve Disaster: One Year Later, fintechbusinessweekly.substack.com, 1 year ago
7. The collapse of a fintech firm with 10 million users has left many Americans without access to their money, NBC News, 2024-05-22
8. Synapse, thepaypers.com, Mar 17, 20
9. Synapse Financial Technologies Inc. Asset Profile | Preqin, preqin.com
13. CFPB files complaint against Synapse Financial Technologies, Consumer Finance Monitor, 2025-08-29
14. Synapse Financial Technologies Bankruptcy: Are You Owed Money?, classaction.org, 2024-11-08
15. CFPB Backs Chapter 7 Conversion in Synapse Financial Technologies Bankruptcy, Consumer Financial Services Law Monitor, 2025-06-25
16. Synapse bankruptcy case tossed, bankingdive.com, Nov 14, 20
17. FINANCIAL INTERMEDIARIES—Bankruptcy court permanently bars Synapse and imposes $1 penalty, vitallaw.com, Aug 22, 20

How this case file was put together

Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.

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