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> In the immediate aftermath of Synapse's bankruptcy, which happened after an exodus of its fintech clients, a court-appointed trustee found that up to $96 mill

> In the immediate aftermath of Synapse's bankruptcy, which happened after an exodus of its fintech clients, a court-appointed trustee found that up to $96 million of customer funds was missing. The mystery of where those funds are hasn't been solved, despite six months of court-mediated efforts between the four banks involved. This is the real question.

la64710 2y ago
How is this possible in USA?
- bboygravity 2y ago
  Read "A decade of armageddon" or some other good books on how the US markets and banks actually work.. TLDR: financial crime pays in the US.
- jpoesen 2y ago
  Decades of deregulation. More to come.
  - gruez 2y ago
    What specific regulation would have prevented this? Or is this just a knee jerk response against "deregulation"?
    - rvba 2y ago
      One could make a regulation that account data cannot be lumped.
    - bdangubic 2y ago
      the one simple one I can think of would be to specifically make depositor acknowledge “hey this is not FDIC ensured, do you want to proceed?” probably still some percentage of people would fall for it and continue with the creation of an account but at least then this discussion here would be “stupid is as stupid does.”
  - pxmpxm 2y ago
    Sounding edgy doesn't really mask the fact you have no idea what you're talking about. See https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street... for example
- highcountess 2y ago
  You clearly do not know a single real thing about America. America itself is a con job from to back, to to bottom, left to right. Between the reserve currency global fraud, the inflation money printing, the scam startups, the deficit spending and national debt fraud, the various banking and financial frauds, even our children are raised with fraudulent schemes with things like the “fundraising” through selling Girl Scout cookies and circulate bars. All the scamming online, in our professional lives, personal lives, or fake religious groups and political entities, is all just snake oil heritage and the rich plundering the country through a fraud based economy. It’s something that most Europeans that come to America either are shocked by or fall prey to, because not only are laws tighter in Europe regarding fraudulent activities, but in many places of Western Europe, society is still relatively high trust and of good morals and ethics with little of the overt and blatant open scamming and lies you see in America on a daily basis to such a degree that most Americans cannot even see it. A more apparent example of that is our stores in America that are always having a BIG BIG SALE of up to 80% OFF. When it’s just the same market prices claiming to be 80% discounted from some made up price.
  - jmclnx 2y ago
    And to add to this, I think it was JC Penny that called this "80% OFF" sale out and stopped doing that. The result, they came very close to Chapter 11. They ended up reversing that policy just to stay in business. This is just one example of how really stupid the Average American is. The past election also just proved how dumb the average person is in the US.
    - PaulDavisThe1st 2y ago
      JC Penney's problems went considerably further than whether they did or did not run an "80% OFF" sale.
      - themadturk 2y ago
        True, but the ending of "80% off" style sales was a very visible problem for them.
- pxmpxm 2y ago
  You mean how could someone possibly send their life savings into some bullshit lotto-ticket-account app? Especially when their interest rate is 20bps more than any real bank. I don't think it's any different from people learning life lessons from all the crypto 10% weekly return schemes.
chefandy 2y ago
Personally I think the real question is why a robber that stole $500 from a bank teller drawer and anyone that helped them gets thrown in prison without any meaningful consideration of their circumstances while these besuited lowlifes get to go home to their families every night while they decide amongst themselves whether they can figure out who is responsible for destroying thousands of people’s lives.
- dehrmann 2y ago
  I don't want to go out of my way to defend their incompetence, but you have to prove what happened. It's not fair to send a CEO to prison because a different insider independently embezzled funds and they lost the records.
  - Super_Jambo 2y ago
    Seems like a rather large moral hazard if we don't? At some point the courts should be able to say "ok fine you were the directors responsible for the company you're going to prison n years, sorry." Bet we'd see a lot more documentation suddenly appear.
    - suzzer99 2y ago
      I'd bet 95% of fintech startups are just walking moral hazards to begin with.
    - JumpCrisscross 2y ago
      > Seems like a rather large moral hazard if we don't Based on what? The catastrophic failure rate is low. And if you’re sensitive to that risk, don’t bank with a firm that’s selling you on sticking it to the man or whatever.
    - cool_dude85 2y ago
      But think of the innovation we'd lose out on by jailing executives doing this. A bank that gives sub-market interest and "invests" part of the difference in a scratcher game that they run. Oh, and for complex legal reasons, they're not a bank, but they do offer bank accounts at a different bank.
HeavenFox 2y ago
In hindsight the fact that these neobanks can advertise their customers' funds are FDIC-insured is crazy. If I run a ponzi scheme but deposit my victims' money at Chase, does that mean I can correctly claim the funds are FDIC-insured?
- nradov 2y ago
  There's generally nothing stopping scammers from lying in ads. Enforcement is only done afterwards.
- hunter2_ 2y ago
  The fact that any bank would advertise "FDIC insured" is silly, as it conditions potential customers to look to the banks for this information. It would be better if folks were conditioned to consult only the FDIC themselves for this information.
  - cperciva 2y ago
    It serves the same purpose as asking customers "are you a terrorist" -- it creates an easily prosecutable offence.
    - stoperaticless 2y ago
      Could you expand on why is it easily prosecutable? I sense that it has something to do with lying in documents. But hypothetically: if I write “no”. Proof of lying requires proof of terrorism. (At which point you did all the job of proving terorism, despite the document)
      - rjsw 2y ago
        If you ask it online then I guess it counts as wire fraud which may be easier to prosecute.
    - dooglius 2y ago
      Is terrorism not already an easily prosecutable offense?

la64710 2y ago

How is this possible in USA?

bboygravity 2y ago
Read "A decade of armageddon" or some other good books on how the US markets and banks actually work.. TLDR: financial crime pays in the US.
jpoesen 2y ago
Decades of deregulation. More to come.
- gruez 2y ago
  What specific regulation would have prevented this? Or is this just a knee jerk response against "deregulation"?
  - rvba 2y ago
    One could make a regulation that account data cannot be lumped.
  - bdangubic 2y ago
    the one simple one I can think of would be to specifically make depositor acknowledge “hey this is not FDIC ensured, do you want to proceed?” probably still some percentage of people would fall for it and continue with the creation of an account but at least then this discussion here would be “stupid is as stupid does.”
- pxmpxm 2y ago
  Sounding edgy doesn't really mask the fact you have no idea what you're talking about. See https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street... for example
highcountess 2y ago
You clearly do not know a single real thing about America. America itself is a con job from to back, to to bottom, left to right. Between the reserve currency global fraud, the inflation money printing, the scam startups, the deficit spending and national debt fraud, the various banking and financial frauds, even our children are raised with fraudulent schemes with things like the “fundraising” through selling Girl Scout cookies and circulate bars. All the scamming online, in our professional lives, personal lives, or fake religious groups and political entities, is all just snake oil heritage and the rich plundering the country through a fraud based economy. It’s something that most Europeans that come to America either are shocked by or fall prey to, because not only are laws tighter in Europe regarding fraudulent activities, but in many places of Western Europe, society is still relatively high trust and of good morals and ethics with little of the overt and blatant open scamming and lies you see in America on a daily basis to such a degree that most Americans cannot even see it. A more apparent example of that is our stores in America that are always having a BIG BIG SALE of up to 80% OFF. When it’s just the same market prices claiming to be 80% discounted from some made up price.
- jmclnx 2y ago
  And to add to this, I think it was JC Penny that called this "80% OFF" sale out and stopped doing that. The result, they came very close to Chapter 11. They ended up reversing that policy just to stay in business. This is just one example of how really stupid the Average American is. The past election also just proved how dumb the average person is in the US.
  - PaulDavisThe1st 2y ago
    JC Penney's problems went considerably further than whether they did or did not run an "80% OFF" sale.
    - themadturk 2y ago
      True, but the ending of "80% off" style sales was a very visible problem for them.
pxmpxm 2y ago
You mean how could someone possibly send their life savings into some bullshit lotto-ticket-account app? Especially when their interest rate is 20bps more than any real bank. I don't think it's any different from people learning life lessons from all the crypto 10% weekly return schemes.

chefandy 2y ago

Personally I think the real question is why a robber that stole $500 from a bank teller drawer and anyone that helped them gets thrown in prison without any meaningful consideration of their circumstances while these besuited lowlifes get to go home to their families every night while they decide amongst themselves whether they can figure out who is responsible for destroying thousands of people’s lives.

dehrmann 2y ago
I don't want to go out of my way to defend their incompetence, but you have to prove what happened. It's not fair to send a CEO to prison because a different insider independently embezzled funds and they lost the records.
- Super_Jambo 2y ago
  Seems like a rather large moral hazard if we don't? At some point the courts should be able to say "ok fine you were the directors responsible for the company you're going to prison n years, sorry." Bet we'd see a lot more documentation suddenly appear.
  - suzzer99 2y ago
    I'd bet 95% of fintech startups are just walking moral hazards to begin with.
  - JumpCrisscross 2y ago
    > Seems like a rather large moral hazard if we don't Based on what? The catastrophic failure rate is low. And if you’re sensitive to that risk, don’t bank with a firm that’s selling you on sticking it to the man or whatever.
  - cool_dude85 2y ago
    But think of the innovation we'd lose out on by jailing executives doing this. A bank that gives sub-market interest and "invests" part of the difference in a scratcher game that they run. Oh, and for complex legal reasons, they're not a bank, but they do offer bank accounts at a different bank.

HeavenFox 2y ago

In hindsight the fact that these neobanks can advertise their customers' funds are FDIC-insured is crazy. If I run a ponzi scheme but deposit my victims' money at Chase, does that mean I can correctly claim the funds are FDIC-insured?

nradov 2y ago
There's generally nothing stopping scammers from lying in ads. Enforcement is only done afterwards.
hunter2_ 2y ago
The fact that any bank would advertise "FDIC insured" is silly, as it conditions potential customers to look to the banks for this information. It would be better if folks were conditioned to consult only the FDIC themselves for this information.
- cperciva 2y ago
  It serves the same purpose as asking customers "are you a terrorist" -- it creates an easily prosecutable offence.
  - stoperaticless 2y ago
    Could you expand on why is it easily prosecutable? I sense that it has something to do with lying in documents. But hypothetically: if I write “no”. Proof of lying requires proof of terrorism. (At which point you did all the job of proving terorism, despite the document)
    - rjsw 2y ago
      If you ask it online then I guess it counts as wire fraud which may be easier to prosecute.
  - dooglius 2y ago
    Is terrorism not already an easily prosecutable offense?