The collapse of Synapse, a banking-as-a-service (BaaS) fintech startup backed by a16z, has sent shockwaves through the fintech industry, potentially impacting as many as 100 fintechs and 10 million end customers. Synapse, which operated a service allowing others to embed banking services into their offerings, filed for Chapter 11 bankruptcy in April 2024, hoping to sell its assets in a $9.7 million firesale to another fintech, TabaPay. However, TabaPay backed out, leaving Synapse on the brink of liquidation.
The fallout from Synapse’s collapse has been far-reaching. For instance, teen banking startup Copper had to abruptly discontinue its banking deposit accounts and debit cards, leaving an unknown number of consumers without access to their funds. Other fintechs and their customers are also paying the price of Synapse’s demise.
As the dust settles, the industry is left to grapple with the aftermath and the potential harm to millions of consumers.
Read more: techcrunch.com