85,000 Yotta Accounts with $112 Million Locked
The abrupt shutdown and bankruptcy of financial technology company Synapse is causing major trouble for many other companies and their customers.
Synapse acts as a middleman between financial technology companies and banks. But when it filed for Chapter 11 bankruptcy protection in April, it shut down its services to some of its fintech and bank partners, including Evolve Bank & Trust.
Synapse’s shutdown has “needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law,” Evolve said in a statement last week.
And that is causing major headaches for Yotta customers and at least more than another dozen fintechs such as Mainvest, Juno and Copper. CNBC reports that for the past three weeks, 85,000 Yotta customers with a combined $112 million in savings have been locked out of their accounts.
Yotta is an online-only savings account that encouraged users to save money with free weekly lottery-style sweepstakes. Yotta says it doesn’t hold any customer funds. Deposits are held with Synapse Brokerage LLC member FDIC Program Banks such as Evolve. Funds held with these partner banks are eligible for FDIC insurance up to $500,000.
The main disagreement between Synapse and Evolve is about how much of Yotta’s funds are held at Evolve, and how much are held at other banks that Synapse worked with.
In total, it is estimated that Synapse issues have locked up more than 200,000 customer accounts at all affected fintechs.
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