In a financial tangle that has devastated thousands of Americans, customers of the popular savings app Yotta have been unable to access their money for months due to a dispute between financial technology companies.
The crisis, which began in May 2024, has left approximately 85,000 account holders unable to withdraw an estimated $112 million in deposits. Many customers have reported being offered mere pennies on the dollar of their original savings, with some receiving less than 1% of their deposits.
“We never imagined something like this could happen,” said Adam Moelis, CEO of Yotta, in an interview with CNBC. “We worked with banks that are members of the FDIC. We never imagined a scenario like this could play out and that no regulator would step in and help.”
At the heart of the crisis is a complex relationship between three entities: Yotta, a fintech startup that offered prize-linked savings accounts; Synapse, a middleware company that connected fintech apps with banks; and Evolve Bank & Trust, which held many of the customer deposits.
The trouble began when Synapse filed for Chapter 11 bankruptcy in April 2024, followed by Evolve freezing all withdrawals through Yotta on May 11. Since then, customers have been trapped in a nightmare scenario where their money appears in their account balances but cannot be accessed.
In September, Yotta filed a lawsuit against Evolve in the U.S. District Court for the Northern District of California, accusing the bank of “grotesque misconduct” in its handling of customer funds. According to the lawsuit, Evolve allegedly debited customer accounts for more than $25 million in unauthorized transactions before Synapse collapsed.
“Evolve had no right to take this money from customers and never informed Yotta or its customers that it was doing so,” the lawsuit states. Yotta further alleges that Evolve and Synapse inflated account balances to conceal these transactions.
Evolve has disputed these claims, stating in court filings that “it is Synapse’s conduct and not Evolve’s that is at issue.” The bank maintains that Synapse moved most of the funds away from Evolve.
By November 2024, the situation had deteriorated further. According to data collected by Yotta from over 13,000 affected customers, only about $11.8 million of the total $64.9 million in deposits reported by those customers was being offered for distribution.
The crisis has upended lives. Leticia Barros, who had been saving for a house, told Banking Dive that she and her boyfriend had to take out a loan from his 401k to make a down payment after being unable to access her savings. Another customer, Zack Jacobs, created a website called “Fight For Our Funds” after losing access to $100,000.
Despite customer accounts being connected to FDIC-insured banks, the FDIC has not intervened because no bank has technically failed. Moelis has suggested that regulators might be letting the situation play out because most affected customers “aren’t necessarily wealthy and don’t have the ability to lobby.”
The crisis highlights the potential risks of fintech banking models where customers’ money passes through multiple entities. As one customer who received less than 1% of their savings told investigators, “It is like losing a house.”
For thousands of Americans who trusted these financial apps with their savings, the question remains: will they ever see their money again?