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Trustee says $85 million of customer savings is missing

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Jelena McWilliams, chair of the Federal Deposit Insurance Corporation (FDIC), during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, D.C., U.S., on Tuesday, Aug. 3, 2021.

Al Drago | Bloomberg | Getty Images

There is an $85 million shortfall between what partner banks of fintech middleman Synapse are holding and what depositors are owed, according to the court-appointed trustee in the Synapse bankruptcy.

Customers of fintech firms that used Synapse to link up with banks had $265 million in balances. But the banks themselves only had $180 million associated with those accounts, trustee Jelena McWilliams said in a report filed late Thursday.

The missing funds explain what is at the heart of the worst meltdown in the U.S. fintech sector since its emergence in the years after the 2008 financial crisis. More than 100,000 customers of a diverse set of fintech companies have been locked out of their savings accounts for nearly a month after the failure of Synapse, an Andreessen Horowitz-backed startup, amid disagreements over user balances.

While Synapse and its partners, including Evolve Bank & Trust, have lobbed accusations of improperly moving balances or keeping incorrect ledgers at each other in court filings, McWilliams’ report is the first outside attempt to determine the scope of missing funds in this mess.

Much unknown

Spreading the pain

McWilliams’ task has been made harder because there are no funds to pay external forensics firms or even former Synapse employees to help, she said in her report. Synapse fired the last of its employees on May 24.

Still, some customers whose funds were held at banks in what’s called demand deposit accounts have already begun getting access to accounts, she said.

But users whose funds were pooled in a communal way known as for benefit of, or FBO, accounts, will have a harder time getting their money. A full reconciliation will take weeks more to…

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Trustee says $85 million of customer savings is missing

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