Synapse Financial Technologies


Synapse Financial Technologies, Inc. was an American banking as a service company based in San Francisco. It was founded in 2014 and filed for bankruptcy in April 2024.

History

Synapse was founded in 2014 as a banking as a service platform. The company claimed to keep customer deposits in FDIC insured bank accounts, and argued that this provided a comparable level of depositor protection to conventional bank accounts. However, since Synapse was a non-bank company, it did not provide FDIC protection for depositors against its own bankruptcy.
The company was backed by Andreessen Horowitz and raised $51 million from investors. The company had 100 direct business relationships with financial technology companies including Dave and Honey, indirectly serving 10 million retail customers through those relationships. It was one of the 100 fastest growing financial services companies in the United States in 2022. In 2023, as "discrepancies in Synapse’s ledgers were piling up," the company's board discussed removing Sankaet Pathak from his role as CEO, but investors from Andreessen Horowitz argued against this.
The company was valued as a unicorn in 2024.
The company filed for Chapter 11 bankruptcy protection in April 2024. Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds. In May 2024, former FDIC Chair Jelena McWilliams, appointed as bankruptcy trustee, said there was a shortfall between Synapse’s records and those of the banks, estimated at $65 million to $96 million.
The CEO of Yotta Savings – a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits.
, a lawsuit was in progress against four of Synapse's banking partners, seeking class action status in regard to losses by those affected by Synapse's actions.