A Group of Senators Urges Synapse to Restore Customers’ Access to Money
A group of senators has come together to demand that Synapse’s owners and their bank and fintech partners take immediate action to restore customers’ access to their funds. The senators have pointed fingers at both the partners and investors of the company for the missing customer funds.
According to a public letter shared by U.S. Senator Sherrod Brown and colleagues on Monday, customers of companies partnered with banking-as-a-service startup Synapse have been unable to access their money since mid-May.
The letter was addressed to W. Scott Stafford, president and CEO of Evolve Bank & Trust, and was also sent to major investors in Synapse, as well as the company’s principal bank and fintech partners. The recipients include former Synapse CEO Sankaet Pathak, venture firms Andreessen Horowitz, Core Innovation Capital, and Trinity Ventures, American Bank, AMG National Trust, Trust and Lineage Bank, and fintech companies Copper, Juno, Mercury, Yieldstreet, and Yotta.
Synapse, based in San Francisco, offered services that allowed other companies, mainly fintechs, to embed banking services into their offerings. However, the company faced challenges and eventually filed for bankruptcy, leaving customers frozen out of their accounts.
The senators emphasized that all players involved, including the venture capitalists backing them, must work together to make all customer deposits accessible. They highlighted the responsibility of fintech firms and banks in ensuring the safety of end-user funds and called for immediate action to address the situation.
In recent weeks, the banking-as-a-service industry has faced challenges, including cyberattacks and data breaches affecting partner companies. This turmoil has raised concerns about the inherent weaknesses of the tri-party business model.
As the situation unfolds, it is essential for all parties involved to prioritize restoring consumer access to their funds and address the underlying issues in the industry.
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