Banks in Synapse mess make progress toward releasing deposits of stranded fintech customers
There may be relief for the thousands of Americans whose savings have been locked in frozen fintech accounts for the past two months.
Banks involved in the mess caused by the collapse of fintech intermediary Synapse have made progress piecing together account information for stranded customers that could result in a release of funds in a matter of weeks, according to a person briefed on the matter.
Staff of Evolve Bank & Trust and Lineage Bank in particular have made headway after hiring a former Synapse engineer late last month to unlock data from the failed fintech middleman, said the person, who asked for anonymity to speak candidly about the process.
The development comes as regulators, including the Federal Reserve and the Federal Deposit Insurance Corporation, pressure the banks involved to release funds after media and lawmakers have heightened awareness of the debacle.
Beginning in May, more than 100,000 customers of fintech apps like Yotta, Juno and Copper have been locked out of their accounts.
«We're strongly encouraging Evolve to do whatever it can to help make money available to those depositors,» Federal Reserve Chair Jerome Powell told the Senate banking committee Tuesday.
The sudden optimism of key players involved in the negotiations, including Evolve chairman and founder Scot Lenoir, comes after weeks of apparent gridlock in a California bankruptcy court. Shoddy record keeping and a dearth of funds to pay for a forensic analysis have made it difficult to piece together who is owed what, bankruptcy trustee Jelena McWilliams has said.
The episode revealed how small banks involved in the «banking-as-a-service» sector didn't properly manage unregulated partners like Synapse, founded in 2014 by a
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