Synapse Financial Technologies

Synapse Financial Technologies, Inc. was an American banking as a service company based in San Francisco. It was founded in 2014 and filed for bankruptcy in April 2024.^[2][3]

Synapse Financial Technologies

Company type	Private company
Industry	Financial services
Founded	April 14, 2014 (2014-04-14)
Founder	Sankaet Pathak[1]
Defunct	April 2024; 1 year ago (2024-04)
Fate	Bankrupt
Headquarters	San Francisco , United States
Area served	United States
Key people	Sankaet Pathak (CEO)[1]
Products	banking as a service to other financial technology companies
Number of employees	157 (2024)
Website	synapsefi.com Archived May 9, 2024, at the Wayback Machine

History

Synapse was founded in 2014 as a banking as a service platform.^[4] The company claimed to keep customer deposits in FDIC insured bank accounts, and argued that this provided a comparable level of depositor protection to conventional bank accounts. However, since Synapse was a non-bank company, it did not provide FDIC protection for depositors against its own bankruptcy.^[5]

The company was backed by Andreessen Horowitz and raised $51 million from investors.^[6] The company had 100 direct business relationships with financial technology companies including Dave and Honey,^[1] indirectly serving 10 million retail customers through those relationships.^[7][8] It was one of the 100 fastest growing financial services companies in the United States in 2022.^[9] The company was valued as a unicorn in 2024.^[10]

The company filed for chapter 11 bankruptcy protection in April 2024.^[11] Following the bankruptcy declaration, "tens of thousands of U.S. businesses and consumers" lost access to Synapse's services, leaving questions as to the location of funds.^[3][7][12] In May 2024, former FDIC Chair Jelena McWilliams, appointed as bankruptcy trustee, said there was a shortfall between Synapse’s records and those of the banks, estimated at $65 million to $96 million.^[5][6]

The CEO of Yotta Savings – a fintech company which relied on Synapse to manage customer deposits – released financial data in November 2024 showing that 13,725 former customers lost deposited money due to the Synapse bankruptcy. They were refunded $11.8 million, a fraction of their $64.9 million deposits.^[13]

As of November 2024^[update], a lawsuit was in progress against four of Synapse's banking partners, seeking class action status in regard to losses by those affected by Synapse's actions.^[14]