Synapse Financial Technologies, Inc. was an American banking as a service company based in San Francisco. It was founded in 2014 and filed for bankruptcy in April 2024.[2][3]
Synapse was founded in 2014 as a banking as a service platform.[4] The company claimed to keep customer deposits in FDIC insured bank accounts, and argued that this provided a comparable level of depositor protection to conventional bank accounts. However, since Synapse was a non-bank company, it did not provide FDIC protection for depositors against its own bankruptcy.[5]
The company was backed by Andreessen Horowitz and raised $51 million from investors.[6] The company had 100 direct business relationships with financial technology companies including Dave and Honey,[1] indirectly serving 10 million retail customers through those relationships.[7][8] It was one of the 100 fastest growing financial services companies in the United States in 2022.[9] In 2023, as "discrepancies in Synapse’s ledgers were piling up," the company's board discussed removing Sankaet Pathak from his role as CEO, but investors from Andreessen Horowitz argued against this.[10] The company was valued as a unicorn in 2024.[11]
The company filed for Chapter 11 bankruptcy protection in April 2024.[12] Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds.[3][7][13] In May 2024, former FDIC Chair Jelena McWilliams, appointed as bankruptcy trustee, said there was a shortfall between Synapse’s records and those of the banks, estimated at $65 million to $96 million.[5][6]
The CEO of Yotta Savings – a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits.[14]
As of November2024[update], a lawsuit was in progress against four of Synapse's banking partners, seeking class action status in regard to losses by those affected by Synapse's actions.[15]
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