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Synapse says that it was actually the Bank (Evolve) that made the accounting mistakes, including missing transactions, debits that weren't reported, sending in

by phonon 2y 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-synapse https://lex.substack.com/p/podcast-what-really-happened-at-s...

abenga 2y ago
From a cursory look at how it describes itself (BaaS, etc), Evolve is hardly a "bank" in the traditional sense of the word.
hn_throwaway_99 2y ago
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.
- phonon 2y ago
  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.
rawgabbit 2y ago
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-bankruptcy-fintech-fdic-insurance.html https://www.nytimes.com/2024/07/09/business/synapse-bankrupt...
- phonon 2y ago
  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.
zimbatm 2y ago
Wise also recently switched their US bank provider from Evolve to Community Federal Savings Bank. Maybe they had similar issues?
- Aspos 2y ago
  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.
  - kdmtctl 2y ago
    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.
    - Aspos 2y ago
      One should not build their own cryptography, one should not build their own ledger, that's what I am saying.
      - kdmtctl 2y ago
        I've seen a lot of ledgers. Crypto is much more complicated. In the end of the day you provide a full stack or just do UI/marketing. This is a good old vertical integration dilemma.
hipadev23 2y ago
Sankaet is full of shit.

by phonon 2y ago

abenga 2y ago

From a cursory look at how it describes itself (BaaS, etc), Evolve is hardly a "bank" in the traditional sense of the word.

hn_throwaway_99 2y ago

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.

phonon 2y ago
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.

rawgabbit 2y ago

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-bankruptcy-fintech-fdic-insurance.html https://www.nytimes.com/2024/07/09/business/synapse-bankrupt...

phonon 2y ago
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.

zimbatm 2y ago

Wise also recently switched their US bank provider from Evolve to Community Federal Savings Bank. Maybe they had similar issues?

Aspos 2y ago
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.
- kdmtctl 2y ago
  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.
  - Aspos 2y ago
    One should not build their own cryptography, one should not build their own ledger, that's what I am saying.
    - kdmtctl 2y ago
      I've seen a lot of ledgers. Crypto is much more complicated. In the end of the day you provide a full stack or just do UI/marketing. This is a good old vertical integration dilemma.

hipadev23 2y ago

Sankaet is full of shit.