Bank deposits are now being frozen after an unexpected bankruptcy created a discrepancy between financial technology companies and banks.
The bank accounts of tens of thousands of U.S. businesses and consumers have been frozen in the aftermath of the abrupt shutdown and bankruptcy of financial technology company Synapse, which acts as a middleman between financial technology companies and banks.
Synapse filed for Chapter 11 bankruptcy protection in April and has shut down its services to some of its fintech or bank partners, including Evolve Bank & Trust.
That has caused disruptions for customers of Synapse’s partners, leading to accounts being frozen or showing funds not existing at all.
Synapse’s shutdown has “needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law,” said Memphis-based Evolve in a statement last week.
Because Evolve is a bank and is required to comply with banking laws, it has to make sure all customer deposits are accounted for to the penny, which may take time.
Evolve also stressed that, despite customers’ deposits being frozen, it is well capitalized.
A source who is familiar with the size and scope of the number of accounts impacted at Evolve estimated the number of frozen accounts to be under 200,000.
The person was not authorized to speak on the record.
Other banks or fintech companies that San Francisco-based Synapse partnered with included Tennessee-based Lineage Bank, as well as savings rewards company Yotta, a company that gives prizes to customers who save money.
Reddit message boards for Evolve, Synapse and Yotta were full of customers complaining about being unable to access their funds.
The scale of Synapse’s disruptions could widen, reports US News.
Synapse, in court documents, estimates that before it filed for bankruptcy it had roughly 100 customer relationships that exposed roughly 10 million Americans to their services.
However, banking regulators believe that figure is extremely high and the number of impacted Americans will be thousands or tens of thousands.
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Also Read: A Massive US Bank is Now Closing Credit Cards
Other Economy News Today
A banker is now convicted for stealing money from customers while working at Bank of America over a 10-year period.
The personal banker was arrested after her years-long scam, resulting in nearly $300,000 being stolen, came to light.
Police in Seneca, South Carolina said they received a report in 2013 about missing money from an account with Bank of America.
The victim, who also reported the incident to the Customer Service department, told police he was missing around $30,000.
Investigators worked with Bank of America for several weeks after the crime was reported and learned that an employee who had been stealing money from several people in Oconee County.
The police said the victims would use the Bank of America location in Seneca as their primary bank and Bobbi Cortese was their personal banker.
Seneca Police investigators and the US Secret Service spent nearly a decade doing more interviews.
Meanwhile, Bank of America was given time to complete an internal investigation.
It was revealed that Cortese had stolen nearly $300,000 from four people while working at the bank.
Some of the money was in the victims’ bank accounts for life insurance payouts related to the deaths of their spouses.
Others had a lifetime of earnings that was supposed to be used for their retirement, said police.
Cortese would open accounts under the victims’ names without their knowledge or consent and would perform a “shell game.”
This is when a scammer uses the money from one victim to replace what she stole from another victim.
After investigating further, police said Cortese forged several documents and issued them to the victims to hide the theft.
She committed these acts for about four years while working at the Bank of America, said police.
Cortese was arrested in May 2023 and charged with four counts of breach of trust and two counts of forgery.
She was later fired by the bank, reports The-Sun.
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Also Read: A Massive Bank Now Freezes Money From Direct Deposits
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