Topics
in style
AI
Amazon
Image Credits:Synapse
Apps
Biotech & Health
clime
Image Credits:Synapse
Cloud Computing
Commerce
Crypto
Enterprise
EVs
Fintech
Fundraising
Gadgets
Gaming
Government & Policy
Hardware
layoff
Media & Entertainment
Meta
Microsoft
Privacy
Robotics
Security
societal
Space
Startups
TikTok
Transportation
Venture
More from TechCrunch
Events
Startup Battlefield
StrictlyVC
Podcasts
video
Partner Content
TechCrunch Brand Studio
Crunchboard
get hold of Us
The collapse and failure of BaaS fintechSynapsehas revealed how treacherous things are for the often - interdependent fintech world when one primal musician hits trouble .
Synapse run a table service that grant others ( mainly fintechs ) to plant banking services into their offerings . For instance , a software supplier that particularize in payroll for 1099 declarer - leaden businesses used Synapse to render an instant payment feature ; others used it to extend specialised credit / debit cards .
The San Francisco - based inauguration conjure a sum of just over $ 50 million in venture capital in its lifetime , including a 2019$33 million Series B raiseled by Andreessen Horowitz ’s Angela Strange . Synapsewobbled in 2023 with layoffsandfiled for Chapter 11 in April of this year , hoping to trade its assets in a $ 9.7 million fire cut-rate sale to another fintech , TabaPay . ButTabaPay walk .
The outcome was that Synapse has been urge to knock off entirely under Chapter 7 and a fortune of other fintechs such as Juno , Yotta and Yieldstreet — and their customer — are paying the price for Synapse ’s demise .
The walloping has left observersquestioning the banking - as - a - service concept and digital banking as a whole , look at that zillion of consumers with virtually $ 160 million in deposit stay on unable to get at their funds .
Here is a timeline of Synapse ’s troubles and the ongoing wallop it is have on banking consumers .
2024
Founder raises $11 million for a new startup
August 22 : Sankaet Pathak isfull steam forward on Foundation , his raw robotics startup . On X , Pathak said that Foundation ’s end is to “ automate GDP through AI and Robotics to free people from childbed jobs , allowing them to act on their passion . ” He also on August 20 posted on X that Synapse ’s former partner Evolve Bank “ needs to get paying out customers and plow the deficit they produce . ”
Join us at TechCrunch Sessions: AI
Exhibit at TechCrunch Sessions: AI
Nearly $160 million in funds still frozen
July 7 : Fintech Business Weekly reports that a recent “ status conferencein the ongoing Synapse failure did n’t volunteer much Bob Hope to end users whose funds were still glacial , with sweat to settle and release the remaining funds , approximately $ 158.6 million , appearing to slow . ” This means that about $ 158.6 million was still owe to end users . However , there was an judge $ 65 million to $ 95 million in investment firm that were miss .
Senators urge Synapse and its partners and backers to restore customers’ access to their money
July 1 : A grouping of senators banded together to pep up Synapse ’s owners and bank and fintech married person to“immediately bushel client ’ entree to their money . ”As part of their demand , the senator implicated both the partners and the speculation investors of the companionship as being responsible for overlook customer funds .
Synapse CEO moves on to starting another company
June 12 : Synapse ’s chief operating officer Sankaet Pathak has reportedly alreadyraised $ 10 millionfor a new robotics startup even whilequestions remainedon the whereabouts of $ 85 million in Synapse ’s customer economy .
Fallout continues, more fintechs and millions of consumers affected
May 25 : base on Synapse ’s filing , as many as 100 fintechs and 10 million end customerswere potentially impact by the company ’s collapse by the final stage of May . For instance , funds at crypto app Juno and banking chopine Yotta were also impacted by Synapse ’s collapse . Meanwhile , Mainvest , a fintech lender to eatery business , said it was actually shut down as a resultant role .
U.S. trustee pushes for Chapter 7
May 16 : A United States trustee filed an hand brake motion to commute Synapse ’s debt reorganization Chapter 11 bankruptcy into aliquidation Chapter 7 . The trustee say that Synapse had “ grossly ” mismanage its estate so that losses were continuing with slight “ reasonable likelihood of reorganization ” that would allow the company to issue on the other side and hold on .
Customer teen banking startup Copper discontinues its banking operations
May 13 : Synapse customer teenager banking startup Copper had toabruptly cease its banking alluviation account and debit cardsas a consequence of Synapse ’s difficulties . That left an nameless number of consumer , mostly families , without admission to the funds they had trustingly deposited into Copper ’s accounts .
Sale of assets called off
May 9 : TabaPay tell it hadabandoned its plansto purchase Synapse ’s plus . There was heap of finger - pointing when that deal dissolved . Synapse ’s chief operating officer made accusations that the problem was banking better half Evolve Bank & Trust . And Evolve abnegate those flush , saying it was not involve , and not to charge . Meanwhile , another player in the saga , Mercury , said Synapse ’s allegations had “ no merit . ”
Synapse files for Chapter 11 bankruptcy, assets to be sold off for $9.7 million
April 22 : Synapse filed for Chapter 11 failure and said at that sentence that its assets would beacquired by insistent payments company TabaPay , pending failure court approval . ( Again , TabaPay would take the air away from the hatful a couple weeks later . )
2023
Synapse lays off staff, reports of tension with partner Evolve Bank arise
October 13 : Evolve Bank & Trust and startup digital bank Mercury ended their respective relationships with Synapse and work directly with each other . Evolve and Synapse address the brouhahahere .
October 6 : Synapse confirmed that it hadlaid off86 citizenry , or about 40 % of the caller . That was just four month after the ship’s company had let go of 18 % of its manpower as “ the current macroeconomic stipulation ” had begun to touch on its client and political platform , affecting its look for growth . In 2019 , TechCrunch reported on the company’s$33 million Series B raiseled by Andreessen Horowitz after rebranding from SynapseFi .
observe : This article was updated post - publication to clarify that Synapse has not yet convert to Chapter 7 .
Want more fintech news in your inbox ? Sign up for TechCrunch Fintechhere .
Want to reach out with a tip ? e-mail me atmaryann@techcrunch.comor get off me a subject matter on Signal at 408.204.3036 . you may also send a note to the whole TechCrunch crew attips@techcrunch.com . For more untroubled communications , click here to get hold of us , which include SecureDrop ( didactics here ) and link to code message apps .
