Have you checked your account balance lately?
Collateral Damage
People who put their savings into banking startups Yotta and Juno are left holding the bag after a little-known middleman firm went belly-up — and took their life savings with it.
As CNBC reports, the dispute between that middleman, Synapse, and its lender, Evolve Bank & Trust, has left thousands of people in a nightmare scenario where their money has seemingly vanished into thin air.
The debacle began earlier this year when the Andreessen Horowitz-backed Synapse and the FDIC-insured Evolve Bank began beefing over customer account balances. As a result, the startup locked user accounts — and ended up going bankrupt after the apps it worked with jumped ship.
Exploding Synapses
Immediately after Synapse filed for bankruptcy, a court-appointed trustee discovered that up to $96 million of its customer funds were missing. Six months of back-and-forth between Synapse and Evolve later, the only thing certain about that missing money is that it’s completely screwed over the people who trusted those companies to safeguard their savings.
Kayla Morris, a Yotta user, said during a recent court hearing that after putting hundreds of thousands of dollars into savings with the expectation that she’d have access to it, she was perturbed when she got a check for a tiny fraction of what she was owed.
“We were informed last Monday that Evolve was only going to pay us $500 out of that $280,000,” Morris told the California bankruptcy court. “It’s just devastating.”
Fight Night
Thus far, regulators have declined to handle the situation because Synapse isn’t technically a bank — and now, people caught in the crosshairs are taking matters into their own hands.
Zach Jacobs, another Yotta customer, was so angry when he was offered a piddling $126 of the more than $94,000 he put in his savings account that he decided to organize.
With his Fight for Our Funds volunteer group, Jacobs hopes to, as the organization’s website explains, “apply pressure to every regulatory, legislative, and law enforcement body in the United States” as he and the thousands of people who joined up try to get their money back.
“When you tell people about this, it’s like, ‘There’s no way this can happen,'” Jacobs told CNBC. “A bank just robbed us. This is the first reverse bank robbery in the history of America.”
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