Risk register · entry
Q1 · PredictableSynapse / Evolve
'FDIC-insured' deposits froze when a ledger intermediary failed to reconcile.
Documented, foreseeable risks that were ignored anyway. The failure is attention, not information.
Why this quadrant
The account was sold as FDIC-insured and the deposits sat at an insured bank, but the record of who owned what was kept by an intermediary no regulator audited. When Synapse failed the ledger could not be reconciled, leaving a shortfall of 65 to 95 million dollars. Insurance covers a bank failing. It does not cover not knowing whose money it is. No one has been charged with fraud.
The record
- $265 million in frozen consumer deposits at collapse (May 2024)certain
- $65 to $95 million ledger shortfall identified by trustee Jelena McWilliamscertain
- Roughly 100,000 to 10 million end users affected across ~100 fintechs (estimates vary widely by source)uncertain
- Synapse filed Chapter 11 bankruptcy on April 22, 2024certain
- TabaPay's $9.7 million acquisition deal collapsed May 8-9, 2024certain
- Funds began freezing for end users starting May 11, 2024certain
- Jared Fread lost access to $62,460.79 in his Juno accountcertain
- CFPB filed complaint/adversary proceeding August 21, 2025; stipulated judgment entered September 12, 2025 with $1 civil penaltycertain
- CFPB allocated $46 million toward Synapse/Evolve victimslikely
- Synapse had raised just over $50 million in lifetime VC funding, including a $33 million Series B from Andreessen Horowitz in 2019likely
- Third-party reconciliation would have cost an estimated $2 to 3 million, per trustee McWilliamslikely
Sources
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