- U.S. Senators have publicly addressed the inability of Synapse customers to access their funds since mid-May due to the company's bankruptcy.
- The Senators urged Synapse's major equity holders and partner banks to take immediate action to unfreeze customer deposits and restore access to their funds.
In a public letter on Monday, U.S. Senator Sherrod Brown and fellow Senators Ron Wyden, Tammy Baldwin, and John Fetterman have shed light on the troubles that banking-as-a-service startup Synapse has caused to its customers.
The letter pointed out that customers of the bankrupt fintech startup have been unable to access their funds since mid-May. And Synapse’s partners and owners must take all necessary steps to make available all customer deposits currently frozen by the bankruptcy.
"As Synapse’s major equity holders, 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," the Senators wrote.
"To end the uncertainty and financial damage to consumers, we urge you to collectively pool the necessary resources to immediately make available all customer deposits currently frozen by the Synapse bankruptcy."
To give a little context of the matter: San Francisco-based Synapse provided a service that let fintechs integrate banking features into their products.
However, Synapse started having disagreements with several of its partners about how much in customer balances it owed. Last year, its banking partner Evolve Bank & Trust and business banking startup Mercury chose to collaborate directly, bypassing Synapse.
In April Synapse filed for Chapter 11, and by May 11, it had disabled a technology system that allowed lenders like Evolve Bank & Trust to handle transactions and account information. These disputes between the startup and its banking partners, ultimately, have left potentially millions of Americans unable to access their money.
Edited by Harshajit Sarmah
