- For three weeks, 85,000 Yotta customers with a combined $112 million in savings have been locked out of their accounts, CEO and co-founder Adam Moelis told CNBC.
- The disruption, caused by a dispute between fintech middleman Synapse and Tennessee-based Evolve Bank & Trust, has upended lives, Moelis said.
- “We never imagined a scenario like this could play out and that no regulator would step in and help,” he said.
When Adam Moelis co-founded Yotta in 2019, he aimed to help Americans save money. Instead, a dispute between Yotta’s banking partners—Synapse and Evolve Bank & Trust—has locked 85,000 customers out of their accounts, impacting $112 million in savings.
The crisis began on May 11 when Synapse, which declared bankruptcy earlier this year, clashed with Evolve over tracking customer funds. As a result, accounts at Yotta and two dozen other startups were frozen, disrupting lives and forcing customers to borrow money for essential needs.
“The stories are heartbreaking,” Moelis told CNBC. “We never imagined something like this could happen.”
The dispute centres on accurate tracking of transactions and balances. Synapse and Evolve disagree on the allocation of Yotta’s funds among different banks. Synapse hasn’t commented, while Evolve blames Synapse for the breakdown.
The issue highlights the risks of the “banking as a service” model popular in fintech, prompting potential regulatory scrutiny. Moelis estimates at least 200,000 accounts are affected across various fintech firms.
Former FDIC Chair Jelena McWilliams has been appointed trustee over Synapse to find a resolution. Moelis remains hopeful for a partial release of funds soon.
“We know how much money came into the system. The money doesn’t just disappear; it has to be somewhere,” he said.
