Updated: March 12, 2025
Synapse End Users:
We recently provided you an update on the status of reconciliation efforts. We are writing again with some additional information we feel obliged to share. This important information was discovered in our reconciliation and recovery process and demonstrates two serious issues related to periodic statements generated by Synapse Financial Technologies, Inc. (“Synapse”). Remember, as part of Synapse’s revised cash management program it began in the Fall of 2023, Synapse created a subsidiary company (“Synapse Brokerage”), and hastily migrated funds away from Evolve to AMG (along with Lineage and American, the Synapse ecosystem banks).
In short, we have discovered two significant issues with Synapse’s preparation and distribution of statements.
- We see that in many cases in April and May of 2024, the End User statements that Synapse provided to Evolve go from showing $0.00 on deposit at Evolve at the end of April to showing substantial money on deposit at Evolve at the beginning of May—without any corresponding transfers to account for “the appearance of funds”; and
- Synapse prepared one set of statements to show Evolve, but Synapse provided End Users with a completely different set of statements, which omitted key transactions between End User accounts at Evolve and their accounts at Synapse Brokerage.
These issues reinforce our existing belief that a deeper look into Synapse’s record-keeping was warranted and that an independent, holistic reconciliation is the only way forward.
Responsibility for Statements. To understand these issues, it is important first to know that, as part of the Evolve- Synapse Master Bank Service Agreement, Synapse agreed that it would be responsible contractually to produce and deliver statements for End Users each month (Figure 1 and Figure 2).
Figure 1
Figure 2
Statement Issue #1: Fintech Statements Show Money Moving with No Corresponding Transactions
As part of the reconciliation, we extensively examined statements Synapse created, some of which were uploaded to the Dashboard system for Evolve to view, and others that were provided to End Users through their fintech platform and which Evolve received through End User appeals. In so doing, it has come to our attention that in many cases between April and May of 2024, the End User statements that Synapse provided to Evolve go from showing $0.00 on deposit at the end of April to showing substantial money on deposit at the beginning of May, but without any transactions that month or the prior month showing the deposit of those funds. In other words, compared side-by-side, money seems to magically appear in End Users’ accounts in May 2024, without any actual transaction in that month or the prior month (April 2024) that would explain the change.
For example, if you look at the statement for this Yotta End User (we have removed personal information for privacy reasons), you will see something that at first appears normal. Page 1 of the April 2024 statement shows a starting and ending balance of $0.00 (Figure 3) and page 2 shows that there are no transactions for the month (Figure 4). It literally says, “You had no transactions this month.”
Figure 3
Figure 4
This may appear normal, until we look at the End User’s statement for the following month, which on page 1 suddenly shows a starting balance of $2,223.86 (Figure 5) with no corresponding transactions in April or May to explain the sudden appearance of funds.
Figure 5
In fact, just like their April statement, page 2 of the End User’s May statement also shows no transactions for the month (Figure 6), again noting “You had no transactions this month.”
Figure 6
How can the End User end April with $0, but begin May with more than $2,200 without receiving any deposits in April or May? The answer is: they cannot—or should not. Remember, all of these statements were prepared by Synapse.
Here is another example from a Juno End User:
Figure 7
This End User has $0.00 as of April 30, 2024 and no deposits or withdrawals that month (Figure 7). But somehow begins May with $362.81 on deposit (Figure 8).
Figure 8
There is no logical explanation for this. Money does not appear in accounts without a corresponding deposit to the account. Synapse prepared and provided End User account statements, like this one, that in this April and May 2024 period falsely show balances changing without any corresponding transactions. The money suddenly appears on paper in the purported balance of the account statement, but without any actual movement of money into the account.
Figure 9
There is no transaction record—either at Evolve or the Federal Reserve (a fully independent government source)—that corresponds to these balances that Synapse showed as suddenly appearing in these accounts. Fund transfers explaining the sudden changes in balance do not appear to be shown in any statements Synapse prepared and provided to End Users either. This is likely because (as described below) Synapse appears to have shown End Users a different set of statements.
In short, Synapse prepared statements that literally and figuratively don’t add up. If the change in balance Synapse showed between April 30 and May 1, 2024 represented funds that were sent to the account by ACH, then those transfers should be shown in the statements and should be plain to see in the records of the Federal Reserve. But they are not.
As we have previously said, based on what we could see from Synapse, we had concerns that the Synapse ledgers that AMG, Lineage and American relied upon are “materially inaccurate”. Because of those concerns we hired Ankura, a world class forensic accounting company, to perform a reconciliation. Its work corroborated our concerns. Our other concern is that it is possible – maybe likely – that any bank paying out based on the Synapse ledgers paid incorrect amounts to individual End Users.
These examples clearly demonstrate just how unreliable Synapse’s recordkeeping was. A bank that “has paid out in accordance with Synapse Brokerage’s instructions” is placing unwarranted trust in Synapse and its ledgers to distribute funds to End Users, without critical information about the true allocation of these funds amongst banks.
This also makes abundantly clear why Evolve needs the information it has requested. It is the responsible thing to do. Once Ankura has this information, it can leverage these transaction records and the Federal Reserve (a fully independent government source) to determine where each End Users funds are or should be.
This is just another example of significant abnormalities we have encountered as we continue to dive into the aftermath of the Synapse bankruptcy.
Statement Issue #2: Synapse Provided Different Account Statements for Different Audiences
We have also identified a critical problem when comparing End User statements that Synapse prepared: inconsistencies between the monthly statements that Synapse produced for Evolve’s records and those it produced to be sent to End Users. This aligns with our confirmation that the Synapse ledgers were “materially inaccurate,” and that Synapse was sharing inaccurate and/or misleading information.
For example, below is a Synapse-created account statement for an End User for October 2023, which Synapse created for, and provided to, Evolve (Figure 10). We have removed the End User’s personal information for privacy reasons.
As you’ll see, this Synapse-generated statement includes an account number for the End User (1). This account at Evolve and the account number are unique; no other account has this account number. The statement also shows a routing number, which is a special number used to identify a bank—in this case, Evolve (2). Lineage, American, and AMG all have their own routing numbers. The routing and account number shown on any statement should align with the bank and account where the End User’s funds sit. If the money moves to another bank, those funds should not be reflected on the account statement as being on deposit at that bank. Statements also show important information like the End User’s starting balance (3), the total of deposits and withdrawals made that month, and the ending balance for the End User (4).
Figure 10
The monthly statement also shows the day-to-day withdrawal and deposit activity of the End User, with a running balance reflecting the transactions occurring in the account (Figure 11). For example, this End User received nine cents from Yotta Saving on October 11, 2023 (5). The same day, the End User deposited $25 (6). And, then on October 12, 2023, we see that the End User received another two-cent deposit from Yotta Saving (7).
Figure 11
The same day we see that the End User’s balance at Evolve ($2,760.93) was transferred to the End User’s account at Synapse Brokerage (see marker 8 in Figure 12). A day later, on October 13, another $25.09 was transferred to Synapse Brokerage (9).
Synapse prepared these statements and made them available each month to Evolve in a database intended to hold End User records. The problem is that Synapse was sending entirely different statements to End Users.
Compare the statement Synapse prepared for Evolve (shown above) and the one Synapse prepared for the same End User (Figure 13, shown below), and you will see some similarities. It shows the End User’s account number, the routing number, the beginning balance, total withdrawals and deposits, and the ending balance in the account.
Figure 13
However, when we look at them side-by-side, these statements are definitely not the same. The statement Synapse provided to Evolve correctly showed an ending balance of $25.45. But the statement Synapse provided the Yotta End User is very different, showing an ending balance of $2,862.82; a difference of $2,837.37!
Figure 14
But why the difference?
Remember those transfers to Synapse Brokerage on October 12th and 13th? Synapse showed those transfers—and many others like them—on the statements that Synapse created for Evolve. But Synapse omitted those transfers to Synapse Brokerage from the statement Synapse provided to End Users through their fintech.
Figure 15
On the same days in October, Synapse showed the End User received only small deposits from Yotta and did not show the End User the $2,760.93 transfer to Synapse Brokerage on October 12th and the $25.09 transfer to Synapse Brokerage on Oct. 13th.
This is why there is such a dramatic difference between the ending balances in the statements Synapse showed Evolve and the statements Synapse prepared and provided to End Users through their fintech. Synapse directed the movement of money to Synapse Brokerage, but did not show those transfers on the statements that Synapse provided to the End User, as it was required to do. In other words, Synapse showed Evolve one thing on statements (monies transferring to Synapse Brokerage) and showed End Users a different thing on statements (that there were no transfers to Synapse Brokerage).
As we said earlier, the routing and account number shown on any statement should align with the bank and account where the End User’s funds sit. If the money moves to another bank, those funds should no longer be shown as on deposit in that account, or with that bank.
Wait, there’s more.
At the same time Evolve and End Users were being provided with completely different records about deposit accounts at Evolve, there was yet another set of discrepancies.
Synapse also represented to Evolve that Synapse Brokerage was giving the End User a separate statement for their brokerage account at Synapse Brokerage. These brokerage statements purported to show where all of an End User’s money was located: at Evolve, in their Synapse Brokerage account, and/or at the Synapse ecosystem banks (AMG, Lineage, or American) that partnered with Synapse Brokerage.
Figure 16
Despite these statements being uploaded by Synapse to Evolve, End Users appear to have only received the statement prepared for the fintech (Figure 17, on the right).
Figure 17
Why is all of this paperwork important?
These statements show that Synapse omitted important details that have left End Users with a false understanding of where their money was. Specifically,
- Synapse did not disclose to the End User in periodic statements when their funds were moved to or from Synapse Brokerage
- Synapse did not provide account statements to End Users showing accurate account and routing numbers for the Synapse ecosystem bank that actually and contemporaneously held End Users’ funds
- Synapse did not send complete and accurate statements to End Users
All of this served to mislead End Users into believing End Users had money at Evolve when Synapse had actually transferred End Users’ money to Synapse Brokerage.
And while the above figures are an example for an individual End User’s accounts at Evolve and Synapse Brokerage, every End User with a Synapse Brokerage account appears to have received the same treatment.
Here’s another example:
Figure 18
In the example below (Figure 19), you’ll see the same thing happens to an End User at Juno. Specifically, the End User statement Synapse provided to Evolve is very different from the statement Synapse provided to the End User.
Figure 19
Once again, on the left is the account statement Synapse provided to Evolve and on the right is the account statement provided to the End User. And once again, notice the transactions between Evolve and Synapse Brokerage, this time on October 18th and 24th . Those transactions are shown on the account statement Synapse provided to Evolve, but absent entirely on the account statement Synapse provided to the End User.
Instead, the End User is shown no activity on either of those days in October. The impact on the End User’s balance is dramatic. In the statement Synapse provided to Evolve, the statement correctly shows the End User with a $0.00 balance as of October 24, whereas the statement that Synapse provided to the End User leads him or her to believe that $9,874.90 never left Evolve.
Synapse also created a brokerage statement for the same Juno user, which it provided to Evolve (Figure 20):
Figure 20
Again, Synapse shows that the $9,874.90 that was swept to Synapse Brokerage on October 18 and 24 was sitting in a different account. But these statements—uploaded to Evolve’s records database by Synapse—were not provided by Synapse to End Users.
It is now clear to Evolve why End Users are confused. Synapse gave one statement to Evolve, which showed money being transferred to End User Synapse Brokerage accounts and then sitting in a different, non-Evolve account. And, at the same time for the same account for the same period, Synapse provided the End User with a totally different statement that omitted that Synapse had transferred funds out of Evolve to the End User’s Synapse Brokerage account. Additionally, those statements showed End Users a single sum of funds and indicated an Evolve routing and account number, when in fact their funds were transferred to Synapse Brokerage and thus potentially held at multiple other banks in multiple accounts.
Figure 21
All of this raises serious concerns. Why would Synapse go to the trouble of showing Evolve one set of records, while showing End Users a completely different set? We do not know the answer to that question.
But, while the discovery of this pattern of behavior is very troubling, it is not the end of the road. We are no less committed to pursuing our efforts to facilitate a reconciliation of End User funds at each institution in the Synapse ecosystem, as Evolve has already done for itself. We still believe End Users should receive the funds they are owed, and we will continue working as quickly as we can to bring this matter to a close.
Thank you once again for your patience.
Sincerely,
The Evolve Leadership Team
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