[HN Gopher] Synapse still can't find its money
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Synapse still can't find its money
Author : ekpyrotic
Score : 18 points
Date : 2024-11-25 21:24 UTC (1 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| toomuchtodo wrote:
| https://archive.today/VeE15
| Brian_K_White wrote:
| "We closed our eyes while throwing money into a pit. Now we can't
| find it!"
| Terr_ wrote:
| "We don't know exactly which customer's money went into which
| bank(s)" gets a bit more spicy when you add the fact all the
| customers put in $265m and the real-banks only seem to have $180m
| of it, and AFAIK nobody has a clear explanation for the missing
| $85m. (~32%)
|
| P.S.: I also find it amusing that they stored+hosted their
| financial ledger using MongoDB. Not that you can't commit massive
| financial mismanagement with any tool, but I was not a fan of the
| "NoSQL" evangelism of the 2010s.
| duxup wrote:
| About the Synapse situation
|
| >As a result, the partner banks and fintechs were all reliant on
| Synapse to determine how much each customer was owed at all
| times.
|
| I don't understand how a partner bank would... want to do this?
|
| As a bank knowing your numbers and who you owe seems like a
| fundamental function, why would you leave that to some middle man
| and some strange portal?
|
| How do you know they don't just suddenly say you owe more than
| you expect?
|
| It sounds like a big risk for a bank....
| Terr_ wrote:
| IANABanker but I suspect it was appealing for the 4 "real"
| banks because they barely had any work to do. From their
| perspective they had one single corporate customer called
| "Synapse" with an account that had a nice huge balance, and
| life was easy.
|
| Contrast that to if the same sum was divided across thousands
| of individual accounts. Each would involve a certain amount of
| regulatory reporting, identity proof, pestering people to pick
| a beneficiary, monthly statements, etc. In addition there would
| need to be some way for Synapse to do deposits/withdrawals on
| the owner's behalf, and more of the sum would be subject to
| FDIC deposit premiums.
| rossdavidh wrote:
| If I understand it correctly, the bank had an account in which
| Synapse put money. The bank knows how much money Synapse had in
| its account. This is all that the bank was responsible for. The
| people who were customers of Synapse's customers, were three
| levels removed from the bank.
|
| I am neither a lawyer nor an accountant, this is just my
| understanding of the article.
| gwbas1c wrote:
| > In June, the FDIC made it clear that its insurance fund doesn't
| cover the failure of nonbanks like Synapse, and that in the event
| of such a firm's failure, recovering funds through the courts
| wasn't guaranteed.
|
| It seems they should be able to sue Evolve (the bank), given that
| they money is there, and there's proof that the money's there.
|
| IE, the risk of 3x damages should be enough to scare the bank
| into paying out.
| Workaccount2 wrote:
| I'm sure FDIC will come around at some point and bail out the
| average folks who got wiped here.
|
| Just like they bailed out the totally average definitely not rich
| people/corporations who got wiped by SVB collapsing.
|
| Right guys? Right?
| Jtsummers wrote:
| The problem here is knowing customer balances. A lot of the
| money is still out there, but it is not properly associated
| with any individuals so it's infeasible (at present) to get
| them back their money. Which is different than what FDIC is
| there for, which is to insure against a bank being unable to
| cover deposits, but balances have been properly tracked.
|
| If Synapse (and apparently their partner Evolve) had been
| moderately competent at the job they set out to do, this could
| have been resolved a while ago. Instead the founder of Synapse
| is already off to a new venture and doesn't care about the
| people he screwed over, though I'm sure he feels bad when asked
| about it. Keep failing up.
| rootusrootus wrote:
| The feds need to come crashing down on operations like this.
| Perhaps you should need to be an accredited investor before you
| can put your $280K nest egg into a poorly regulated not-bank
| offering 'prize linked savings' accounts.
| bawana wrote:
| Sounds like Synapse was a great money laundering schemme.
|
| My conclusion is that all aggregators are bad. Economies of scale
| are bad.AI is bad. Anything that devalues humans is bad.
|
| Everything has just become bad.
|
| Reminds me of our blooming awareness of environmental pollution
| in the 70s.
|
| Except instead of it being obvious, this 'financial pollution' is
| insidious, invisible.
|
| Until small pockets of people are crippled. And that is why it
| persists-because enough people are spared this time and the
| inertia of the majority prevents action. Next month it will be
| another corruption exposed. Silicon valley bank, enron, Lehman,
| Salomon ....It just keeps going.
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