Former Texas schoolteacher Kayla Morris put years of savings into a home for her family before selling it and depositing over $280,000 in a savings account at the startup Yotta. However, a collapse of the fintech firm Synapse left her and thousands of other customers locked out of their accounts for months. The dispute between Synapse and Evolve Bank, where the funds were supposed to be held, led to transactions being turned off, resulting in up to $96 million of missing customer funds.
Customers like Morris were devastated to learn that they would only receive a fraction of their savings back, with some receiving as little as $5 out of hundreds of thousands of dollars. While some customers have banded together to demand answers and restitution, others have been left with nothing, facing the reality of losing years of savings in what they are calling a “reverse bank robbery.”
The situation highlights the risks of relying on fintech startups like Yotta, which offload the responsibility of holding customer funds onto middlemen like Synapse. Customers believed their accounts were FDIC-insured, but the collapse of Synapse has left them abandoned by regulators and struggling to recoup their money. The lack of cooperation between banks and the ongoing legal battles indicate a grim outlook for those hoping to recover their lost funds, with no clear solutions in sight.
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