Synapse Financial Technologies, Inc. was an American

banking as a service Banking as a service (BaaS) is the provision of retail banking#products, banking products (such as current accounts and credit cards) to non-bank third parties through API, APIs. Description As a value network, BaaS aims at integrating as many ...

company based in San Francisco. It was founded in 2014 and filed for bankruptcy in April 2024.

History

Synapse was founded in 2014 as a

platform. The company claimed to keep customer deposits in

FDIC The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...

insured bank accounts, and argued that this provided a comparable level of depositor protection to conventional bank accounts. However, since Synapse was a non-bank company, it did not provide FDIC protection for depositors against its own bankruptcy. The company was backed by

Andreessen Horowitz AH Capital Management, LLC (commonly known as Andreessen Horowitz, or a16z) is an American privately held venture capital firm, founded in 2009 by Marc Andreessen and Ben Horowitz. The company is headquartered in Menlo Park, California. As of M ...

and raised $51 million from investors. The company had 100 direct business relationships with financial technology companies including

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and

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, indirectly serving 10 million retail customers through those relationships. It was one of the 100 fastest growing financial services companies in the United States in 2022. The company was valued as a

unicorn The unicorn is a legendary creature that has been described since Classical antiquity, antiquity as a beast with a single large, pointed, spiraling horn (anatomy), horn projecting from its forehead. In European literature and art, the unico ...

in 2024. The company filed for

chapter 11 bankruptcy Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, w ...

protection in April 2024. Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds. In May 2024, former

Chair

Jelena McWilliams Jelena McWilliams (; born July 29, 1973) is a Serbian-American business executive and a former chairman of the Federal Deposit Insurance Corporation. She was nominated to the position and to the FDIC Board of Directors by President Donald Trump ...

, appointed as bankruptcy trustee, said there was a shortfall between Synapse’s records and those of the banks, estimated at $65 million to $96 million. The CEO of

Yotta Savings Yotta Technologies is an American financial technology (fintech) company that offers sweepstakes games, and that formerly offered a prize-linked savings account. On May 11, 2024, due to the failure of Synapse, a fintech company on which Yotta d ...

– a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits. , a lawsuit was in progress against four of Synapse's banking partners, seeking

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status in regard to losses by those affected by Synapse's actions.

References

External links

Official website
archived fro
the original
in 2024 Failed financial technology companies Companies that filed for Chapter 11 bankruptcy in 2024 {{US-corp-stub