Comment by phonon
1 year ago
Synapse says that it was actually the Bank (Evolve) that made the accounting mistakes, including missing transactions, debits that weren't reported, sending in flight transaction to Mercury while debiting Synapse incorrectly etc.
https://lex.substack.com/p/podcast-what-really-happened-at-s...
Thanks for posting this, I will definitely listen to it.
While I haven't listened yet, one thing I don't really buy when it comes to blaming Evolve is that it should fundamentally be Synapse's responsibility to do reconciliation. This is what completely baffled me when I first worked with another BaaS company - they weren't doing any reconciliation of their ledgered accounts with the underlying FBO balances at the partner bank! This was insane to me, and it sound likes Synapse didn't do it either.
So even if Evolve did make accounting mistakes and have missing transactions, Synapse should have caught this much earlier by having regular reconciliations and audits.
They claim they did, Evolve kept putting them off, until they ran out of money.
There's a full transcript (with some images) below the player btw.
Rambling interview. As best as I can tell Synapse said there were technical issues with Evolve the bank.
Meanwhile this article said Synapse withdrew from Evolve the end user funds. Mr. Holmes of Evolve said the bank “transferred all end user funds” to other banks at the request of Synapse, but declined to identify them
https://www.nytimes.com/2024/07/09/business/synapse-bankrupt...
I'm sure the spokesperson for Evolve who then says "“It’s complicated,” he wrote in an email Friday, declining to elaborate further."" is fully trustworthy and not eliding any important details.
Wise also recently switched their US bank provider from Evolve to Community Federal Savings Bank. Maybe they had similar issues?
I see no reason why CFSB would be in any way different from Evolve, they are just not caught up in the mess yet.
Synapse problem was fundamental and it stems from the same mistake OP is making: never ever build your own, homegrown ledger if you can avoid it.
You can't avoid this. It is either your client or bank's client. And no bank will take the burden to account every $0.2 transaction for you, spending its own computing power. It just a quite expensive thing to do. That is why banks often separate the main ledger and retail ledger[s]. Each system tuned for a different performance profile.
2 replies →
From a cursory look at how it describes itself (BaaS, etc), Evolve is hardly a "bank" in the traditional sense of the word.
Sankaet is full of shit.