The bank accounts of tens of thousands of U.S.
businesses and consumers have been frozen in the aftermath of the abrupt shutdown and bankruptcy of financial technology company Synapse, which acts as a middleman between financial technology companies and banks. Synapse filed for Chapter 11 bankruptcy protection in April and has shut down its services to some of its fintech or bank partners, including Evolve Bank & Trust.
In court, representatives for Synapse's customers argued that liquidation could make the disruptions to customers' funds even worse. Fintech companies, more often than not, are not banks themselves due to the high cost and paperwork necessary to create a new bank. Instead these companies partner with banks — many of them smaller institutions with a minimal national profile — and use that bank as a place to store customer funds without having to be a bank themselves.
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