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Company type | Private company |
---|---|
Industry | Financial services |
Founded | April 14, 2014 |
Founder | Sankaet Pathak [1] |
Defunct | April 2024 |
Fate | Bankrupt |
Headquarters | , |
Area served | United States |
Key people | Sankaet Pathak (CEO) [1] |
Products | banking as a service to other financial technology companies |
Number of employees | 157 (2024) |
Website | synapsefi |
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] The company was valued as a unicorn in 2024. [10]
The company filed for chapter 11 bankruptcy protection in April 2024. [11] 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] [12] 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. [13]
As of November 2024 [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. [14]
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