Shutdown Of Synapse Freezes Deposits Of Americans

The bank accounts of tens of thousands of US companies and consumers have been frozen in the aftermath of the abrupt shutdown and bankruptcy of financial technology firm Synapse, which acts as a middleman between financial technology companies and banks, Ken Sweet reported for the Associated Press (AP).

Synapse filed for Chapter 11 bankruptcy protection in April and has shut down its services to some of its fintech or bank partners, including Evolve Bank & Trust. I Image: Synapse X

Synapse filed for Chapter 11 bankruptcy protection in April and has shut down its services to some of its fintech or bank partners, including Evolve Bank & Trust.

That has caused disruptions for customers of Synapse’s partners, leading to accounts being frozen or showing funds not existing at all.

Synapse’s shutdown has “needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law,” said Memphis-based Evolve in a statement last week.

As Evolve is a bank and is required to comply with banking laws, it has to make sure all customer deposits are accounted for to the penny, which may take time.

Evolve also stressed that, despite customers’ deposits being frozen, it is well capitalized.

A source who is familiar with the size and scope of the number of accounts impacted at Evolve estimated the number of frozen accounts to be under 200,000. The person was not authorized to speak on the record.