Brown, Wyden, Baldwin, Fetterman urge Synapse owners and partners to make customer deposits available immediately

WASHINGTON, DC – Today, US Senator Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing and Urban Affairs Committee, along with Senators Ron Wyden (D-OR), Tammy Baldwin (D-WI) and John Fetterman (D-PA) is calling on Synapse’s owners and banking and fintech partners to restore customers’ access to their money. Since mid-May, customers who entrusted their money to its fintech partners and banks have been unable to access their money. In a letter to Synapse’s partners and owners, Brown and his colleagues say they must take all necessary steps to make available all customer deposits currently frozen by the bankruptcy.

“As major equity holders of Synapse, operators of Synapse-dependent financial services and products, and partner banks, it is ultimately your responsibility to ensure the safety and accessibility of end-user funds. To end the uncertainty and financial harm to consumers, we urge you to collectively pool the necessary resources to immediately make available all customer deposits currently frozen by Synapse’s bankruptcy. the senators wrote.

The letter was sent to major investors in Synapse, as well as the company’s main bank and fintech partners, including:

1. Former Synapse CEO Sankaet Pathak
2. Andreessen Horowitz
3. The main capital of innovation
4. Trinity Ventures
5. Bank of America
6. AMG National Trust
7. Evolve Bank
8. Trust and Lineage Bank
9. COPPER
10. Juno
11. mercury
12. Yield path
13. Yotta

A copy of the letter appears here and below.

We are writing out of concern for the many customers who have been unable to access their deposits due to the bankruptcy of Synapse Financial Technologies, Inc. (Synapse). As major equity holders of Synapse, operators of Synapse-dependent financial services and products, and partner banks, it is ultimately your responsibility to ensure the safety and accessibility of end-user funds. To end the uncertainty and financial harm to consumers, we urge you to pool together the resources necessary to immediately make available all customer deposits currently frozen by Synapse’s bankruptcy.

As you well know, many customers who entrusted their money to Synapse and its fintech partners and banks have been unable to access the money since mid-May. To date, you have failed to provide them with a clear timeline for restoring access to their funds. Equally troubling is the potential shortfall of $65 million to $96 million between what is owed to consumers and funds held on their behalf by Synapse’s partner banks.^[1] These developments are deeply disturbing and completely unacceptable. In due course we will find out who is ultimately responsible for this mess, but in the meantime, the priority must be to restore consumer access to everything of their money.

Each of you is responsible for customers who have been locked out of their accounts. Consumer-facing fintech firms marketed their products to the public as safe and reliable alternatives to banks. Because of these promises, consumers adopted their products and made deposits through their apps and websites. Venture capital firms funded Synapse without insisting on adequate controls to protect consumers. They would benefit as Synapse billed itself as a reliable provider of financial infrastructure. But they failed to ensure that Synapse could fulfill its commitments. Banks teamed up with Synapse in an effort to find new revenue streams. These partnerships further made it possible for Synapse to market services ultimately provided by banks.

Synapse’s bankruptcy has exposed the inherent weaknesses of this three-party business model and has left hard-working Americans and small businesses without access to their money. As those who made the current situation possible, you must accept the great responsibility that comes with handling consumers’ money. In the current circumstances that have left customers without access to their funds for more than a month, that means making customers whole – immediately. We expect you to take all necessary steps to make available all customer deposits currently frozen by Synapse’s bankruptcy.

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