The Spectacular Synapse Collapse (fortune.com)
- Reference: 0176645091
- News link: https://news.slashdot.org/story/25/03/07/1825257/the-spectacular-synapse-collapse
- Source link: https://fortune.com/2025/03/07/synapse-evolve-mercury-bankruptcy-lawsuits/
Founded in 2014 by Sankaet Pathak, Synapse connected consumer-facing fintech platforms with banks holding customer deposits. The disaster unfolded after relationships with regional bank Evolve and unicorn client Mercury deteriorated, triggering a chain reaction through the financial infrastructure. Nearly a year later, Fortune reports that a Department of Justice criminal investigation is underway, while the bankruptcy's court-appointed trustee called the situation an "awful, awful" mess. The debacle, the outlet writes, exposes the risks lurking beneath popular financial apps operating in a regulatory frontier where customer funds travel across an invisible bridge of intermediaries.
[1] https://fortune.com/2025/03/07/synapse-evolve-mercury-bankruptcy-lawsuits/
Beautiful (Score:2)
Everyone knows that regulation are burdensome and a net drain on the economy. If people cannot trust their banks, it just means they will live with the consequences of their decisions. Weak men who cannot calculate risk should not have money anyways. I for one look forward to a return of wildcat banks, massive fraud, and increased market panics.
Re: (Score:2)
If we did maybe Trump and his ilk would actually have to pay their debts.
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What the hell is a strategic crypto coin reserve? No one has suggested a strategic dollar bill reserve. Strategic reserves are for materials that might become hard to obtain in the event of conflict with their producers. Money (real or imaginary) is not strategic, the government creates as much as it wants.
regulations - organizational psychology (Score:2)
We need GOOD regulations. And often well meaning regulations over time result in death by a thousand cuts. Some regulations sound good when you hear them but when you have to implement them you realize they are nearly impossible, or you get two regulations that can't be reconciled. You can only add regulations. No one can remove a bad one, or ones that become redundant because if something goes wrong, the person who removed the regulation could be blamed. There is no upside for the individuals responsi
NURV (Score:1)
The word "Synapse" made me think of the so-so movie Antitrust .
"Fintech" (Score:5, Insightful)
AKA "We want you to give us control of your money but we don't want to be bound by things like 'laws' and 'fiduciary practices'. [1]Just give us your money please" [youtube.com]
[1] https://www.youtube.com/watch?v=eyNAlLO1KlE
Re:"Fintech" (Score:4, Insightful)
I'm sure giving banks etc. fewer regulations to follow will let the free market solve this problem.
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Always and always, history has proven this time and time again.
Let's go ahead and check the history of say the FDIC to confirm just how useless such things are: More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common.
Uh oh
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FDIC doesn't prevent bank failures, it just ensures that if a bank does fail that depositors at the bank will be able to recover some minimal amount of their money. If we had something akin to the collapse that kicked off the Great Depression the FDIC would probably fail as well. There just isn't enough to cover that kind of catastrophic loss much like insurance being worthless if every building burned down at once.
The biggest gripe I have with financial regulations is that governments don't enforce them
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FDIC does help prevent bank failures because people are less encouraged to go on bank runs if they know their deposits will be secured if the bank fails, seems like most failures start small and quickly snowball so that's a nice touch of "ounce of prevention".
> U.S. isn't particularly any more likely to allow citizens widespread use of a banking system they can control or access influence.
Nor should they, in the world today nobodies finances are truly isolated from anyone else's, we all live in a global economy and our collective actions in it can have far reaching consequences. It makes no sense for the USA to allow a rogue financial
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Existing FDIC budget (of zero) can fail to cover its insurance obligations, but that would be purely temporary. If FDIC runs out of money to pay its obligations, congress will simply have to adjust the budget to pay it out of general revenue because of full faith and credit. General revenue which with little help from the Federal Reserve can consist of direct monetization if truly necessary.
FDIC is literally backed by infinity dollars.
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Traditional fintech was simply traditional banking, but online only, and payment service providers. Those Fintech will keep on keeping on.
All these next gen Fintech companies were obviously never going to be a real business. Investors and regulators alike were just in a period of utter insanity. Turns out crypto bros screaming DIGITAL INNOVATION hard enough shuts down their brains, who knew? VC scammers jumped in to abuse their insanity.
VC money was the aim. Temporary customers the means to a cause.