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'I have no money': Thousands of Americans see their savings vanish in Synapse fintech crisis (www.cnbc.com)

submitted 2 days ago by [email protected] to c/[email protected]

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CNBC spoke to a dozen customers caught in the Synapse fintech predicament, people who are owed sums ranging from $7,000 to well over $200,000.

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[–] [email protected] 65 points 2 days ago (10 children)

I'm not from the US so unfamiliar with any of this, but having followed the link to the Yotta website from the article, it is a... gambling site? What leap is missing that people would entrust their savings to gambling?

[–] [email protected] 57 points 2 days ago (4 children)

Might as well be a gambling site: It was a startup bank with no Federal backing (FDIC) that appears to have promised greater returns than traditional banks by investing your money and giving you some of the profits back from dividends.

Still, it was a startup that wasn't fully vested nor backed federally to secure people's deposits. Sad.

[–] [email protected] 80 points 2 days ago (1 children)

The lie was WORSE than that.

A lot of the fintechs invovled actually told people their money was safe, because it was subject to "passthrough FDIC insurance", because their money was ultimately put in an insured bank, and thus was safe.

Problem is that's not how it actually worked, so basically everyone was straight up lied to.

Basically the whole thing is that the bank keeps track of who owns which account and how much money they have, so if they go bust, you just have the FDIC come in and use that data and write checks, basically.

Except since they're disrupting banking, they also decided to just fucking not bother, and so even if there was going to be a payout, nobody has any fucking clue who has how much and in which bank said money was.

Absolute clusterfuck, and about what you'd expect from silly-con valley types.

[–] [email protected] 25 points 2 days ago (1 children)

“Hand us your money and us MBAs promise it’ll eventually get somewhere safe” is not reassuring even before the lie.