The Synapse Collapse: 100,000+ Americans Lost Access to $265 Million

What Happened?

In April 2024, a company most people had never heard of—Synapse Financial Technologies—filed for bankruptcy. Within days, over 100,000 Americans discovered they couldn't access their savings accounts.

These weren't obscure crypto wallets or shady offshore accounts. These were savings accounts at apps like Yotta, Juno, Copper, and dozens of other popular fintechs. Apps that prominently displayed "FDIC Insured" on their websites and marketing.

So what went wrong?

The Hidden Layer Nobody Knew About

Here's the dirty secret of fintech banking: Most fintech apps aren't banks. They're technology companies that partner with actual banks to offer "banking services."

The structure typically looks like this:

That red box—the middleware layer—is where everything fell apart.

Synapse was a "Banking-as-a-Service" (BaaS) provider. They sat between fintech apps and actual FDIC-insured banks, handling the complex regulatory and technical work of moving money around.

The problem? Synapse controlled the ledgers. They tracked who owned what money. And when they went bankrupt, those records became a disaster.

The $96 Million Mystery

When the bankruptcy trustee tried to reconcile Synapse's books, they discovered something horrifying: the numbers didn't add up.

Synapse's records showed customers were owed $265 million. But the actual banks holding the money—Evolve Bank & Trust and others—only had about $180 million.

Where did the rest go? Nobody knows for certain. The trustee's report suggests a combination of:

• Accounting errors and poor record-keeping
• Funds moved between partner banks without proper tracking
• Possible commingling of customer funds with operational accounts
• Failed reconciliations that went unnoticed for months

The result: tens of thousands of people are owed money that simply doesn't exist.

Wait—What About FDIC Insurance?

This is the part that makes people furious. Every single one of these apps advertised "FDIC insurance." Customers reasonably believed their money was protected.

Here's the truth: FDIC insurance protects you if your BANK fails. It does NOT protect you if the middleware company between you and the bank fails.

Think of it this way:

Evolve Bank didn't fail. The banks are fine. But the company that was supposed to track which dollars belonged to which customers? That company is gone, and they took accurate records with them.

Real People, Real Devastation

Court documents and news reports reveal the human cost:

• A teacher with $30,000 in emergency savings couldn't access a penny for months
• Parents who'd saved for their children's college had accounts frozen indefinitely
• Retirees living on fixed incomes suddenly had no access to their cash reserves
• Small business owners couldn't make payroll

Many victims described the same experience: They'd check their app balance and see their full amount. But when they tried to withdraw? Nothing. Transfer blocked. Customer service unreachable. Days turned to weeks turned to months.

The Government Response: Too Little, Too Late?

In January 2025, the CFPB announced an unprecedented $46 million fund to help Synapse victims—the first-ever federal bailout of fintech customers.

But here's the math problem: $46 million doesn't cover a $65-95 million shortfall. Many victims will only receive a fraction of their money back.

The CFPB also issued new guidance reminding fintechs that they can't advertise "FDIC insurance" if customers' deposits aren't actually held at an FDIC-insured bank in a way that provides pass-through coverage. But for Synapse victims, that guidance came too late.

How to Protect Yourself: The Fintech Safety Checklist

After months of research, here's what we recommend:

The Safest Places for Your Savings

Based on the Synapse disaster, here's what we now recommend:

Tier 1: Direct Online Banks (No Middleware)

These are actual banks with their own FDIC insurance. Your account is directly with the insured institution:

• Ally Bank — FDIC Certificate #57803
• Marcus by Goldman Sachs — FDIC Certificate #33124
• Discover Bank — FDIC Certificate #5649
• American Express National Bank — FDIC Certificate #27471
• Synchrony Bank — FDIC Certificate #27314
• Barclays Bank Delaware — FDIC Certificate #14074

Tier 2: Established Fintechs with Direct Bank Charters

• SoFi Bank — Has its own bank charter (FDIC Certificate #92168)
• Varo Bank — Has its own bank charter (FDIC Certificate #92821)

Tier 3: Use with Caution

Fintechs that rely on partner banks and BaaS providers. Not inherently unsafe, but understand the additional layer of risk:

• Chime (partners with Bancorp Bank and Stride Bank)
• Current (partners with Choice Financial Group)
• Dave (partners with Evolve Bank & Trust—yes, the same Evolve from Synapse)

The Bottom Line

The Synapse collapse isn't a cautionary tale about some obscure corner of finance. It's a warning about the entire fintech banking model.

When you deposit money in a fintech app, you're trusting:

1. The app itself to remain solvent
2. The middleware provider (if any) to keep accurate records
3. The partner bank to honor deposits
4. All three entities to work together seamlessly—forever

That's a lot of trust. And when any link in that chain breaks, you discover that "FDIC insured" didn't mean what you thought it meant.

Our advice: Keep your serious savings at actual banks. Use fintechs for convenience and small amounts. And always, always verify where your money actually lives.

Further Reading

• Is Your Fintech Really FDIC Insured? How to Verify
• FDIC Insurance Explained: What's Actually Covered
• Best High-Yield Savings Accounts (Direct Banks Only)