from Hacker News

Synapse still can't find its money

by ekpyrotic on 11/25/24, 9:24 PM with 66 comments

  • by Terr_ on 11/25/24, 10:25 PM

    "We don't know exactly which customer's money went into which bank(s)" gets a bit more spicy when you add the fact all the customers put in $265m and the real-banks only seem to have $180m of it, and AFAIK nobody has a clear explanation for the missing $85m. (~32%)

    P.S.: I also find it amusing that they stored+hosted their financial ledger using MongoDB. Not that you can't commit massive financial mismanagement with any tool, but I was not a fan of the "NoSQL" evangelism of the 2010s.

  • by dangrossman on 11/25/24, 11:24 PM

    I followed the "Launch HN" of Yotta 4 years ago and deposited some money.

    Evolve Bank says "we have determined that we are not holding your funds and you will not be receiving a payment from Evolve" (reconciliationbyevolve.com)

    Yotta customer support says "According to the Synapse Trial Balance Report, your funds are with Evolve Bank & Trust".

    It doesn't appear I'll ever be getting that money back. It's not enough that I'll hurt, but it'll make me think twice about trusting a non-bank fintech startup and their "FDIC insured" claims.

    This is what Yotta's website looked like in 2020, where "FDIC insured" is the most prominent part of their pitch, and one of the homepage blocks is titled "You can’t lose": https://web.archive.org/web/20200630201639/https://www.withy...

    Turns out, we could lose.

  • by duxup on 11/25/24, 10:27 PM

    About the Synapse situation

    >As a result, the partner banks and fintechs were all reliant on Synapse to determine how much each customer was owed at all times.

    I don’t understand how a partner bank would… want to do this?

    As a bank knowing your numbers and who you owe seems like a fundamental function, why would you leave that to some middle man and some strange portal?

    How do you know they don’t just suddenly say you owe more than you expect?

    It sounds like a big risk for a bank….

  • by rootusrootus on 11/25/24, 10:55 PM

    The feds need to come crashing down on operations like this. Perhaps you should need to be an accredited investor before you can put your $280K nest egg into a poorly regulated not-bank offering 'prize linked savings' accounts.

  • by Workaccount2 on 11/25/24, 10:37 PM

    I'm sure FDIC will come around at some point and bail out the average folks who got wiped here.

    Just like they bailed out the totally average definitely not rich people/corporations who got wiped by SVB collapsing.

    Right guys? Right?

  • by neilv on 11/26/24, 12:22 AM

    I briefly saw this HN post on the front page, but when I came back to look for it, shortly after, couldn't find it in the first 25 pages of HN.

    > Synapse still can't find its money (bloomberg.com) 28 points by ekpyrotic 2 hours ago | unvote | flag | hide | past | favorite | 43 comments

    I did find two other stories:

    > 154. Americans see their savings vanish in Synapse fintech crisis (cnbc.com) 246 points by hunter2_ 2 days ago | flag | hide | 237 comments

    > 163. Synapse debacle cost some users their life savings (axios.com) 18 points by toomuchtodo 4 hours ago | flag | hide | 10 comments

  • by toomuchtodo on 11/25/24, 9:29 PM

  • by QuadmasterXLII on 11/25/24, 11:08 PM

    sufficiently profitable incompetence is indistinguishable from malice

  • by gwbas1c on 11/25/24, 10:35 PM

    > In June, the FDIC made it clear that its insurance fund doesn’t cover the failure of nonbanks like Synapse, and that in the event of such a firm’s failure, recovering funds through the courts wasn’t guaranteed.

    It seems they should be able to sue Evolve (the bank), given that they money is there, and there's proof that the money's there.

    IE, the risk of 3x damages should be enough to scare the bank into paying out.

  • by Tempest1981 on 11/25/24, 11:25 PM

    > still can't find

    For those who missed the previous story and discussion 3 days ago:

    https://news.ycombinator.com/item?id=42219407

  • by gethoht on 11/26/24, 12:49 AM

    I'm looking to immediately withdraw all of my funds from wealthfront and put them into fidelity.

  • by bawana on 11/25/24, 10:58 PM

    Sounds like Synapse was a great money laundering schemme.

    My conclusion is that all aggregators are bad. Economies of scale are bad.AI is bad. Anything that devalues humans is bad.

    Everything has just become bad.

    Reminds me of our blooming awareness of environmental pollution in the 70s.

    Except instead of it being obvious, this 'financial pollution' is insidious, invisible.

    Until small pockets of people are crippled. And that is why it persists-because enough people are spared this time and the inertia of the majority prevents action. Next month it will be another corruption exposed. Silicon valley bank, enron, Lehman, Salomon ....It just keeps going.

  • by Brian_K_White on 11/25/24, 10:03 PM

    "We closed our eyes while throwing money into a pit. Now we can't find it!"