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Tag: Synapse

  • Fisker collapsed under the weight of its founder’s promises | TechCrunch

    Fisker collapsed under the weight of its founder’s promises | TechCrunch

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    Welcome back to TechCrunch’s Week in Review — TechCrunch’s newsletter recapping the week’s biggest news. Want it in your inbox every Saturday? Sign up here.

    Over the past eight years, famed vehicle designer Henrik Fisker suggested his EV startup would deliver on a lot of promises, but none came true. As Fisker looks for an unlikely rescue, employees told TechCrunch that the blame rests largely on the shoulders of the husband-and-wife team who steer the company.

    This week also had a major disturbance in the fintech space. After years of missteps and struggles, the banking-as-a-service fintech Synapse officially went bankrupt. Based on Synapse’s filings, as many as 100 fintechs and 10 million end customers could have been impacted by the company’s collapse.

    Elon Musk just got a lot of cash for xAI. The AI startup raised $6 billion at an $18 billion pre-money valuation as it aims to compete with OpenAI, Microsoft and Alphabet.

    In other big money moves, Google is investing nearly $350 million into Flipkart. The new investment gives the Walmart-owned Indian e-commerce startup a valuation of $36 billion. Google, which reaches more than half a billion people in India, identifies the South Asian nation as a key overseas market. 

    News

    Image Credits: Darrell Etherington with files from Getty under license

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    AI models have favorite numbers too: Engineers at Gramener performed an experiment where they asked several major LLM chatbots to pick a random number between 0 and 100 — and the results were fascinating. Read More

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    Analysis

    onyx motorbikes-james Khatiblou
    Image Credits: Bryce Durbin

    What happens to a company when its founder dies?: Onyx Motorbikes was already in trouble — and then its 37-year-old owner passed away unexpectedly with no will or succession plan, leaving behind millions of dollars in debt. Rebecca Bellan reports on how the ensuing battle for control has put Onyx in legal limbo. Read More

    The ‘edgelords’ at OpenAI: Meredith Whittaker has some candid thoughts about the current leadership at OpenAI. Mike Butcher sat down with the Signal president to discuss what she describes as a disrespectful “frat house” contingent of the tech industry in a wide-ranging conversation. Read More

    Don’t expect IPOs from these startups: While 2024 is looking to be a better year for tech startups going public, there’s still a number of high-profile companies that are wanting to wait just a little bit longer. From Plaid to Figma, Rebecca Szkutak rounds up the companies that aren’t itching to go public just yet. Read More

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    Carrie Andrews

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  • A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’ | TechCrunch

    A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’ | TechCrunch

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    The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday. 

    The trustee is asking to convert the company’s debt reorganization Chapter 11 bankruptcy into a liquidation Chapter 7, according to court documents.

    The trustee wrote that the need for Chapter 7 resulted from Synapse “grossly” mismanaging its estate so that losses were continuing with little “reasonable likelihood of reorganization” that would allow the company to emerge on the other side and carry on.

    This new development is significant because Synapse founder Sankaet Pathak earlier this month alleged that its former partners owe it millions, by its own accounting, and were not paying up. Those partners have been insisting that Synapse’s allegations have “no merit.”

    San Francisco-based Synapse, which operated a platform enabling banks and fintech companies to develop financial services, was founded in 2014 by Bryan Keltner and Pathak. It was providing those types of services as an intermediary between banking partner Evolve Bank & Trust and business banking startup Mercury, among others.

    Synapse filed for Chapter 11 bankruptcy on April 22 and, at the same time, announced its assets would be acquired by TabaPay.

    But on May 9, TechCrunch reported that TabaPay’s $9.7 million planned purchase of Synapse’s assets fell apart. At the time, Synapse said the problem was banking partner Evolve Bank & Trust. Evolve alleged that it was not involved in the sale, and was not to blame. Mercury also claimed Synapse’s allegations of being owed money had “no merit.” 

    But the infighting between the companies continued. On May 13, Evolve Bank & Trust filed a motion for an order restoring access to Synapse’s dashboard system after alleging that it had been denied access to the startup’s computer systems and had been forced to freeze end user accounts.

    The U.S. Trustee alleged, according to court documents, that Synapse “inexplicably cut off access to its computer systems on a weekend.”

    “While disputes exist among the parties there appears to be no reasonable explanation for the Debtor [Synapse] cutting off access to its computer systems and indeed the Debtor has since represented that full access has been restored. There appears to be no dispute that these actions have played a material role in end users losing access to their funds. At a minimum, an independent fiduciary is needed to see if a resolution can be reached that minimizes further harm to depositors. For all these reasons, the Debtor has grossly mismanaged the estate and ample cause exists to convert this case to chapter 7.”

    Synapse admitted that it had “no more cash or approval to use any cash after Friday, May 17.”

    A hearing is scheduled for the U.S. Trustee’s emergency motion for May 17.

    Hope remains that the proceedings could continue with no further shenanigans. In a creditor committee meeting that took place on May 15, shared on LinkedIn by Fintech Business Weekly’s Jason Mikula, “it was suggested that fintech clients of Synapse might provide some kind of funding to the company to enable it to keep operating in Chapter 11, presumably in an attempt to resolve the disruption to end users.”

    TechCrunch has reached out to Synapse for comment.

    An Evolve spokesperson confirmed to TechCrunch that on May 11, “Evolve Bank & Trust faced an unexpected challenge when Synapse abruptly and without prior notice disabled our access to an account and transaction information dashboard controlled by Synapse and needed by Evolve. This sudden disruption significantly impacted our ability to maintain the visibility and transparency that Evolve needs to have into accounts and transactions. In response to this situation, Evolve took swift and decisive action to safeguard the security of end user funds and ensure compliance with applicable laws. As a precautionary measure, we made the difficult decision to freeze payment and card activity until we could successfully re-establish access to the dashboard as well as receive necessary account and transaction data and reports. While we understand the inconvenience this may have caused, this step was taken with the utmost consideration for the security and integrity of end user accounts. Evolve continues to work diligently to obtain necessary information from Synapse.”

    The spokesperson added that Evolve has not unfrozen this activity because “Synapse has failed to provide daily transaction and account information that is necessary to process transactions…The account freeze was a precautionary measure to minimize the risks to end users and to Evolve.  At this time, Evolve is not aware of any end user funds being lost as a result of Synapse denying Evolve dashboard access.”

    The previous $9.7 million purchase price that TabaPay was going to pay for Synapse’s assets are significantly lower than the over $50 million in venture capital that Synapse had raised from investors such as Andreessen Horowitz, Trinity Ventures and Core Innovation Capital over time.

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    Mary Ann Azevedo

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