The bank behind the fintech revolution stumbles as customer funds go missing
Evolve Bank at its peak managed around $10 billion for financial technology firms, including Stripe and Affirm. It caters to fintechs that offer technologically friendly savings accounts for everyday people with sweeteners like high interest rates. Most fintechs don't hold their customers' funds and instead use banks like Evolve in the background.
Problems at the bank spilled into the open when a software company called Synapse went bankrupt in April. Synapse connected fintechs to banks like Evolve to store their own customers' funds. Synapse's 100,000 fintech customers were kept in large, commingled accounts under Synapse's management at Evolve, its primary bank partner for years.
After Synapse filed for bankruptcy, thousands of customers suddenly couldn't use their debit cards or move money out of their accounts at Evolve.
Evolve stopped processing payments and said it needed to determine how to distribute funds to customers. A month later, a court-appointed mediator disclosed that as much as $96 million in fintech customer funds might be missing from accounts at Evolve and other banks. Now, Evolve is facing lawsuits over the missing funds, and some clients are starting to back away from the bank.
Both Evolve and Synapse blame each other for the misplaced funds.
"Synapse failed to do the one most critical job they were supposed to do-keep accurate ledgers to track individual end user funds," Evolve said in a statement. It said it is working with other banks to find the funds.
Synapse founder Sankaet Pathak said in a statement that Evolve's inability to pay customers casts doubt on the "safety and security" of the financial system.
The bank, which is privately owned, remains well-capitalized and has ample funds, Lenoir said last month.
Denne historien er fra December 26, 2024-utgaven av Mint Mumbai.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9500+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra December 26, 2024-utgaven av Mint Mumbai.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9500+ magasiner og aviser.
Allerede abonnent? Logg på
RBI cuts repo rate, CRR in boost to growth, liquidity
Repo rate cut by 50 basis points, against 25 bps expected, CRR cut by 100 bps
B2B gold rush at edtechs as AI, GCCs fuel demand
As the edtech sector grapples with waning interest in its core, consumer-focused online learning courses post-pandemic, major edtech and upskilling companies like Simplilearn, upGrad, and Emeritus are strategically shifting gears towards enabling enterprise learning.
Mallya could return, but it won't be a smooth landing
After nearly a decade of silence, Vijay Mallya, the flashy business tycoon who founded one of India's fanciest airlines that eventually went kaput and resulted in him being declared a fugitive economic offender, has re-emerged to tell his side of the story.
Tata Motors, JLR flag China risk in electric car supply chain
Tata Motors Ltd and Jaguar Land Rover have separately highlighted risks to their electric vehicle business for the first time ever, including potential production delays and shortages, likely as a result of China's stranglehold over the EV supply chain.
Now China's ultra-cheap EVs are scaring China
China's ability to make electric vehicles (EVs) cheaply has caused angst in countries with big carmakers, prompting governments to investigate China's subsidies for the sector and to erect trade barriers.
A Tightrope Walk Awaits Shubman Gill
The England series will indicate how the Test captain stands up in the face of a team that needs some serious building
Birla Group's Paints Unit Files Antitrust Case Against Asian Paints
Aditya Birla Group's Indian paints venture has filed an antitrust complaint against market leader Asian Paints for allegedly abusing its market position, three people aware of the matter said, a case that could lead to a stand-off between the two industry rivals.
Iconic characters stage a return as brand endorsers
Shaktimaan, India's beloved superhero and protector of humanity, is back, not to fight supervillains this time, but to endorse mattresses for Gadda Co.
Delhi HC weighs revival of tax notices dating back to '96
Retrospective reopening may shake the credibility of voluntary disclosure schemes
New Galleries Power a Shift in India's Art Scene
Newer galleries are showcasing personal collections and fostering a dialogue among collectors and artists
