U.S. Senators Urge Synapse’s Owners and Partners to Restore Customer Deposits
WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, along with Senators Ron Wyden (D-OR), Tammy Baldwin (D-WI), and John Fetterman (D-PA) are calling on Synapse’s owners and its bank and fintech partners to restore customers’ access to their funds. Since mid-May, customers who entrusted their money to these entities have been unable to access it.
In a letter addressed to Synapse’s partners and owners, the Senators emphasized the need for immediate action. "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," they 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."
The letter was sent to key investors in Synapse as well as principal bank and fintech partners including:
Former Synapse CEO Sankaet Pathak
Andreessen Horowitz
Core Innovation Capital
Trinity Ventures
American Bank
AMG National Trust
Evolve Bank & Trust
Lineage Bank
Copper
Juno
Mercury
Yieldstreet
Yotta
A copy of the letter reads: "We write out of concern for the many customers who have been unable to access their deposits because of the bankruptcy of Synapse Financial Technologies, Inc. (Synapse). 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. 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."
The letter highlights that many customers have been unable to access their money since mid-May. It also notes a potential shortfall between $65 million and $96 million between what consumers are owed and what is held by Synapse's partner banks.
"These developments are both deeply troubling and completely unacceptable," stated the Senators in their letter. "In due time we will find out who is ultimately responsible for this mess, but in the interim, the priority must be to restore consumers’ access to all of their money."
The Senators underscored that each entity involved bears responsibility for resolving this issue promptly: "Consumer-facing fintech firms marketed their products as safe alternatives; venture capital firms funded without insisting on adequate controls; banks joined with Synapse seeking new revenue streams." They added that these partnerships enabled Synapse's operations but failed in ensuring consumer protection.
"The Synapse bankruptcy has exposed inherent weaknesses in this tri-party business model," concluded the Senators. "Under current circumstances that have left customers without access for over a month, making customers whole—immediately—is imperative."