Evolve to Disburse More Funds Tied to Synapse Bankruptcy

Evolve Bank & Trust said Tuesday (March 4) that it is set to return some funds to end users impacted by the Synapse bankruptcy but does not yet have the information it needs to return additional funds.

The bank is working with Ankura to analyze data and confirm institution-to-institution cash management transactions involving end users’ funds held at Evolve, the bank said in a Tuesday update.

“As a result, Evolve will be disbursing more funds to a subset of End Users on or about March 6, 2025, via PayPal and checks sent via the U.S. Postal Service,” the bank said in the update.

To continue identifying and returning funds to the appropriate end users, Evolve needs to receive more transactional data from other Synapse ecosystem banks and to examine that data, according to the update.

“If and when we receive the necessary data from the Synapse ecosystem banks, we expect the comprehensive, ecosystem-wide reconciliation will determine which banks hold End Users’ funds, how much each bank holds, and what still needs to be disbursed to End Users,” Evolve said in the update.

Before Synapse’s bankruptcy, Synapse connected other FinTech firms with banks, helping those startups store their customers’ money, PYMNTS reported in February.

At its peak, Synapse was managing billions of dollars, and when it collapsed in April, thousands of people were locked out of their accounts.

The Federal Deposit Insurance Corp. (FDIC) cited the Synapse situation in September when proposing a rule that would strengthen recordkeeping for bank deposits received from third party, non-bank companies that accept those deposits on behalf of consumers and businesses, PYMNTS reported at the time.

Currently, when non-bank companies deposit their customers’ funds in a bank, they do so in a single custodial account that may hold funds of thousands of consumers and businesses — and the bank may not know the individual owners of funds in the custodial account.

Evolve said in its Tuesday update that it is working with the other Synapse ecosystem banks to get the transaction data it needs to determine where end users’ funds are being held, because the Synapse ledger is unreliable.

“While the process for reconciling and recovering from the Synapse bankruptcy is taking longer than expected, we remain optimistic that with cooperation from the Synapse ecosystem banks, End Users funds can be located and returned to their rightful owners,” the bank said.