Yotta Savings

Last updated

Yotta Savings, incorporated as Yotta Technologies, is an American financial technology (fintech) company that offers a prize-linked savings account.

Contents

History

A Yotta Savings prize winner with a check for $37,990 Prize Linked Savings winner, 2021.jpg
A Yotta Savings prize winner with a check for $37,990

Yotta was founded by Adam Moelis, the son of billionaire investment banker Ken Moelis, and Ben Doyle. The company was founded in October 2019, and its platform launched in July 2020. Early funders of Yotta include hedge fund manager Cliff Asness and Ken Moelis. In January 2021, Yotta announced that it had raised $13.2M in Series A funding, led by Base10 Partners, with additional funding from Y Combinator, Core Innovation Capital, and Slow Ventures. [1] [ non-primary source needed ]

Yotta originally offered depositors an interest rate of 0.2%, establishing a prize pool with the remaining deposit interest, with a top prize of $10 million. The top prize was later revised to $1 million, which has never been won as of July 2023. A New York Times columnist described Yotta as "a smart way to turn gambling into a virtue". [2] Customers receive sweepstakes tickets based on the size of their deposit. [3] One Yotta user won $500,000 in a September 2022 sweepstakes drawing. [4] Coffeezilla, a YouTube producer focused on financial scams, observed that Yotta had pivoted from the sweepstakes model to offering casino-style games, including blackjack, dice, and roulette games, funded by microtransactions instead of savings account deposits. [5]

The company launched an influencer marketing campaign in 2022. [6] Popular influencers helped drive growth in Yotta's customer base. [7]

Funds availability issues

Yotta relied on Synapse, a fintech company based in San Francisco, to make funds available for deposit and withdrawal to partner banks, such as Tennessee-based Evolve Bank & Trust. Following a dispute between Synapse and Evolve, Synapse filed for Chapter 11 bankruptcy protection in 2024, affecting customers of Yotta and at least 24 other startups. Adam Moelis told CNBC in June 2024 that 85,000 Yotta customers, with a combined $112 million in deposits, could not access their funds. [8] Although the partner banks had deposit insurance through the Federal Deposit Insurance Corporation (FDIC), the FDIC has not intervened, because no bank has failed. [7]

In a letter filed with a bankruptcy court on June 20, 2024, Evolve wrote that on April 11, eight banks held a total of $109 million in deposits for Yotta customers and that about a month later, one bank held $1.4 million of Yotta funds. Neither customers nor Evolve received funds in the intervening time. Moelis had said that, as of May 17, Evolve held $112 million of Yotta's customers' funds; Evolve disputes this. [9]

Related Research Articles

<span class="mw-page-title-main">Federal Deposit Insurance Corporation</span> US government agency providing deposit insurance

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was created by the Banking Act of 1933, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this has been increased several times over the years. Since the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, the FDIC insures deposits in member banks up to $250,000 per ownership category. FDIC insurance is backed by the full faith and credit of the government of the United States, and according to the FDIC, "since its start in 1933 no depositor has ever lost a penny of FDIC-insured funds".

The Philadelphia Savings Fund Society (PSFS), originally called the Philadelphia Saving Fund Society, was a savings bank headquartered in Philadelphia, Pennsylvania, United States. PSFS was founded in December 1816, the first savings bank to organize and do business in the United States. The bank would develop as one of the largest savings banks in the United States and became a Philadelphia institution. Generations of Philadelphians first opened accounts as children and became lifelong depositors.

<span class="mw-page-title-main">Green Dot Corporation</span> American issuer of prepaid debit cards

The Green Dot Corporation is an American financial technology and bank holding company headquartered in Austin, Texas. It is the world's largest prepaid debit card company by market capitalization. Green Dot is also a payment platform company and is the technology platform used by Apple Cash, Uber, and Intuit. The company was founded in 1999 by Steve Streit as a prepaid debit card for teenagers to shop online. In 2001, the company pivoted to serving the "unbanked" and "underbanked" communities. In 2010, Green Dot Corporation went public with a valuation of $2 billion. Since its inception, Green Dot has acquired a number of companies in the mobile, financial, and tax industries including Loopt, AccountNow, AchieveCard, UniRush Financial Services, and Santa Barbara Tax Products Group.

Discover Financial Services is an American financial services company that owns and operates Discover Bank, an online bank that offers checking and savings accounts, personal loans, home equity loans, student loans and credit cards. It also owns and operates the Discover and Pulse networks, and owns Diners Club International. Discover Card is the third largest credit card brand in the United States, when measured by cards in force, with nearly 50 million cardholders. Discover is currently headquartered in the Chicago suburb of Riverwoods, Illinois.

<span class="mw-page-title-main">Bank</span> Financial institution which accepts deposits

A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.

The Certificate of Deposit Account Registry Service (CDARS), was a US for-profit service that broke up large deposits and placed them across a network of more than 3000 banks and savings associations around the United States. This allowed depositors to deal with a single bank that participates in CDARS but avoid having funds above the Federal Deposit Insurance Corporation (FDIC) deposit insurance limits in any one bank.

<span class="mw-page-title-main">Insured Network Deposit</span>

The Insured Network Deposits (IND) service was a deposit sweep service for broker-dealers and other custodians of funds. In 2021, the service was reconfigured with several other services offered by IntraFi Network into IntraFi Network Deposits, and IntraFi Funding.

Simple was an American neobank based in Portland, Oregon. It was recognized as the first neobank and operated between 2009 and 2021.

Wise PLC, previously known as TransferWise, is a financial technology company focused on global money transfers. Headquartered in London, it was founded by Kristo Käärmann and Taavet Hinrikus in January 2011. As of 2023, it offers three main products: Wise Account, Wise Business, and Wise Platform.

<span class="mw-page-title-main">Prize-linked savings account</span> Type of savings account

A prize-linked savings account (PLSA) or lottery-linked deposit account is a savings account in which some of the interest payment on bank deposits or marketing dollars are distributed as prizes based on chance. They are attractive to consumers as they function both as a sweepstakes or game of chance and as savings vehicle. PLSAs are similar to lottery bonds, except they are offered by banks, credit unions, prepaid card companies, and financial technology companies, and they can be held for a period of time determined by the consumer. Sometimes the returns are in-kind prizes rather than cash.

SoFi Technologies, Inc. is an American online personal finance company and online bank. Based in San Francisco, SoFi provides financial products including student loan refinancing, mortgages, personal loans, credit card, investing, and banking through both mobile app and desktop interfaces.

<span class="mw-page-title-main">Wealthfront</span> Automated investment service firm

Wealthfront Inc. is an automated investment service firm based in Palo Alto, California, founded by Andy Rachleff and Dan Carroll in 2008. As of November 2023, Wealthfront had $50 billion AUM across 700,000 accounts.

Revolut is a global neobank and financial technology company with headquarters in London, UK that offers banking services for retail customers and businesses. It was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It offers products including banking services, currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing "vaults", personal loans and BNPL, stock trading, crypto, commodities, human resources and other services.

Wealthsimple Inc. is a Canadian online investment management service. The firm was founded in September 2014 by Michael Katchen, Brett Huneycutt, Som Seif, and Rudy Adler and is based in Toronto. As of March 31, 2024, the firm holds over C$38.7 billion in assets under management. It is primarily owned by Power Corporation indirectly at 56.6% through investments made through their holdings in Power Financial, IGM Financial and Portag3.

Brex Inc. is an American financial service and technology company that offers business credit cards and cash management accounts to technology companies. Brex cards are business charge cards, which require at least $50,000 in a bank account if professionally invested, if not with $100,000 to open, and cardholders who default won't damage their personal credit or assets. Emigrant Bank issues the Brex cards.

<span class="mw-page-title-main">Chime (company)</span> American financial services company

Chime Financial, Inc. is a San Francisco–based financial technology company that partners with regional banks to provide certain fee-free mobile banking services. The company offers early access to paychecks, negative account balances without overdraft fees, high-yield savings accounts, peer-to-peer payments, and an interest-free secured credit card. Chime earns the majority of its revenue from the collection of interchange fees on debit card transactions.

Flutterwave is an American fintech company that provides a payment infrastructure for global merchants and payment service providers across the continent.

Current is an American financial services and software development company (FinTech) based in New York City. It provides mobile banking services through its partner bank, Choice Financial Group.

Maya, is a Filipino financial services and digital payments company based in Metro Manila, Philippines.

Mercury is an American fintech company that provides banking services to early stage start-up companies. The company is not a bank, but works with banking service providers to provide bank accounts and other financial services. The company was founded in 2017 in San Francisco, California.

References

  1. ↑ "Yotta Rewards Smart Financial Habits with a Chance to Win $10M to Encourage More Americans to Save". BusinessWire (Press release). January 28, 2021. Retrieved June 28, 2024.
  2. ↑ Coy, Peter (July 28, 2023). "A Smart Way to Turn Gambling Into a Virtue". The New York Times. Retrieved June 21, 2024.
  3. ↑ Basak, Sonali (September 10, 2020). "Startup Bets People Will Save Money for a Chance to Win $10 Million". Bloomberg. Retrieved June 21, 2024.
  4. ↑ Gelsi, Steve (September 28, 2022). "Fintech startup Yotta customer wins $500,000 in sweepstakes drawing". MarketWatch. Retrieved June 21, 2024.
  5. ↑ Findelsen, Stephen (2024-06-03). Youtuber Bank Wont Let You Withdraw Money . Retrieved 2024-07-17– via YouTube.
  6. ↑ "Yotta Launches Affiliate Program with Fintel Connect to Expand Reach of Rewards-Based Savings App". PR Newswire (Press release). Fintel Connect.
  7. 1 2 Mason, Emily (June 18, 2024). "Is Your Money Really Safe In An 'FDIC-Insured' Fintech Account?". Forbes. Retrieved June 21, 2024.
  8. ↑ Son, Hugh (June 1, 2024). "Savings app CEO says 85,000 accounts locked in fintech meltdown: 'We never imagined a scenario like this'". CNBC. Retrieved June 21, 2024.
  9. ↑ Son, Hugh (June 21, 2024). "Nearly $109 million in deposits held for fintech Yotta's customers vanished in Synapse collapse, bank says". CNBC. Retrieved June 21, 2024.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.