Key Points
- Evolve Bank & Trust has begun releasing more funds to Synapse users, with payments arriving via PayPal and checks starting March 6, 2025.
- The Synapse bankruptcy left millions in customer funds frozen or missing, and partner banks like Evolve have struggled with reconciliation.
- Despite the widespread impact, the FDIC and Federal Reserve have not stepped in to assist affected users, leaving many still without their money.
Evolve Bank & Trust has announced another round of payments to users affected by the Synapse Financial Technologies bankruptcy, signaling progress in the months-long effort to return missing funds. The bank stated that additional funds will be disbursed on March 6, 2025, through PayPal and paper checks sent via mail.
Users have been sharing their experiences on Reddit, reporting that they have received claim IDs to at least get a portion of their funds. While this development is a positive step, thousands of users remain uncertain about the full resolution of their balances.
Evolve has reiterated that it is funding forensic accounting firm Ankura Consulting to reconcile balances, but progress is hindered by the alleged refusal of other Synapse-affiliated banks—AMG, Lineage, and American—to share transaction data.
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Background: How The Synapse Collapse Locked Millions of Dollars
Synapse Financial Technologies was a major provider of banking-as-a-service (BaaS), allowing fintech startups to offer banking products without holding charters themselves. Some of the major services to offer banking products via Synapse included Yotta and Juno.
Synapse then partnered with multiple banks on the backend, including Evolve, to provide FDIC-backed accounts.
When Synapse filed for bankruptcy, its financial records proved to be disorganized and incomplete. This created an unprecedented problem—millions of dollars were effectively frozen, leaving users unable to access their funds.
What's worse is that these users had no direct contact or issues with the partner banks. Their apps showed a balance, but the balance was frozen or lost among the various service providers on the backend.
Evolve Bank & Trust has been a key actor in the reconciliation process, as it was one of the largest partner banks. The other partner banks involved are AMG National Trust, American Bank and Lineage. According to court filings, AMG and Lineage have already disbursed nearly all of the funds they held for affected users.
However, given how messy the accounting of all the transactions was by Synapse, it's yet to be seen the final tally of funds across all the banks and what might be missing from end users.
Regulatory Silence Leaves Users Frustrated
Despite the widespread impact of the Synapse failure, neither the FDIC nor the Federal Reserve has stepped in to ensure affected users are made whole. This lack of intervention has drawn criticism from consumer advocates, who argue that regulators have failed to adapt to the risks posed by fintech banking models.
Traditional bank failures typically see swift action from the FDIC, ensuring depositors regain access to their funds within days. However, in this case, the fragmented nature of banking-as-a-service means that no single institution is responsible for the frozen funds, complicating the resolution process.
Legal experts suggest that a regulatory framework tailored to fintech banking is needed to prevent similar crises in the future. Meanwhile, affected users continue to wait, hoping that ongoing reconciliation efforts will eventually restore full access to their funds.
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What To Expect Going Forward
Consumers impacted by the Synapse bankruptcy should continue monitoring their accounts for updates and check for any updates or payments from Evolve Bank.
Users should also be cautious with fintech banking apps, ensuring they understand how funds are held and which institutions are responsible. While regulators have yet to act, public pressure may help push for stronger protections in the future.
For now, staying informed and exploring alternative banking options with direct FDIC coverage can help prevent similar financial disruptions in the future.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
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