By Daily Mail (U.S.) | Created at 2024-11-18 20:41:45 | Updated at 2024-11-25 10:22:29
6 days ago
A banking app user revealed the minuscule amount of cash returned to her after the company's middleman abruptly went bankrupt.
The woman, who did not share her name, says she was handed just $3.68 of the $865.09 she'd deposited with Yotta after its partner Synapse went bust.
'On Election Day they said you're gonna get an email, they were gonna give you back your money... I got back three dollars and I think 62 cents… I did the math, and it was like 0.4 percent.'
She said that she created her account on the app after financial influencer Graham Stephan encouraged people to sign up.
The woman believes not enough people are talking about the banking crash but they should because it is effecting everyday people.
'Part of the reason I think no one's talking about it is because it's so complicated,' she said.
'People have [invested] hundreds of thousands [of dollars], and these are just regular people… it's a savings account.'
Synapse, which acts as a middleman between fintech companies and banks, filed for Chapter 11 bankruptcy protection in April and shut down its services to some of its partners, including savings rewards company Yotta.
Fintech company Yotta users have had their accounts frozen since May
Yotta offered savings accounts that gave members the chance to win money through lotteries and used Synapse services to hold its customers money at FDIC-insurance Evolve Bank & Trust.
After Synapse filed for bankruptcy, Evolve froze access to Yotta customers' accounts blaming Synapse for 'turning off system access for Evolve,' reported Banking Dive.
Yotta customers have been unable to access their funds - totaling more than $100 million - for months because of the freeze.
On November 4, Evolve contacted customers who are owned funds to choose a payment method.
However, when the returned cash hit users bank accounts they were startled to so how little they actually received.
In September, Yotta sued Evolve and Synapse claiming the companies conspired to take millions from its customers.
'We never imagined something like this could happen. We worked with banks that are members of the FDIC. We never imagined a scenario like this could play out and that no regulator would step in and help,' Yotta CEO Adam Moelis told CNBC.
Yotta CEO Adam Moelis said he never imaged something like this would happen and sued Evolve Bank & Trust for conspiring with Synapse
Synapse, which acts as a middleman between fintech companies and banks, filed for bankruptcy shut down its services to some of its partners, including Yotta
Evolve said it is only holding about $46 million belonging to Synapse end users and claimed to have identified 'significant irregularities' in Synapse's ledgers that suggested account balances were 'materially inaccurate,' reported Banking Dive.
'It became clear that Evolve did not hold the amount of end user money that some interested parties have alleged,' Evolve CEO Scott Lenoir said.
'Without a comprehensive, ecosystem-wide review of transaction data, we cannot speak to what other banks may hold for each end user.'
Bankruptcy documents viewed by American Banker suggested that there's an estimated $85 million shortfall between what Synapse's former partner banks are holding and what consumers are owed.
