A woman has told Newsweek that losing money to online banking app Yotta has left her distrusting banks to the point she'd prefer to keep her savings under a mattress.
Users of banking app Yotta lost millions after intermediary Synapse failed, leaving over 100,000 customers' funds locked away from May of this year.
Abby Ritter, 28, lives in Virginia and works in marketing, and in 2021 decided to start banking with Yotta after watching a video about the app that she and many others thought made it seem "like a super cool concept." Saving for a house deposit at the time, Ritter told Newsweek she had $10,000 in her savings account at one point, but she became concerned when she wasn't making the returns she expected, and pulled her money out.
"When they locked our accounts, I luckily only had around $865 [in the account]," she told Newsweek.
On May 10, she received an email from Yotta stating they would "no longer pay rewards balances," so she decided to withdraw her money on May 22, but she received another message two days later stating there were payment processing failures "due to an outage with Synapse Brokerage's banking processors."
"I was a mix of super shocked, angry, and confused, but also so relieved because if this had happened the previous year, I had about $10,000 in the account."
While grateful she had removed most of her money, $865 is still a lot to lose, and Ritter has been closely following the ongoing trials to see if there is any way of getting her money back—but so far she has received only $3.62, and has not heard back since issuing an appeal.
"It's been sad hearing about people that were like me with tens of thousands of dollars locked away," she said, adding that she is a new mom and working, and is "following along when I had time but I can't keep up with everything."
"I'm constantly checking in and getting updates that are just false hope after false hope. It's also made me really distrust the whole banking system," Ritter said. "I've turned into someone wanting to keep my first house savings under my mattress."
Tom South, director of Organic & Web at payment processor Epos Now, explained that Yotta collapsed due to its reliance on Synapse to make funds available, and when Synpase filed for bankruptcy protection, Yotta customers lost access to their funds.
"Yotta isn't a bank, so it was legally unable to hold customer deposits," he explained to Newsweek. "Rather than tracking customer deposits and rewards, Synapse placed all of Yotta customers' money into a single large account at FDIC-insured bank Evolve, which made it virtually impossible to work out how to remunerate customers. Additionally, large volumes of customer money remain unaccounted for."
And because Yotta is a fintech company, not a traditional bank, customers did not have deposit insurance through the Federal Deposit Insurance Corporation (FDIC). While it had suggested deposits were covered by FDIC-insured banks, its "relationship with Synapse contravened the FDIC coverage for accounts. This has made it extremely difficult to recover the full savings lost among Yotta's 85,000 customers."
South warned: "The collapse of Synapse and its implications for Yotta is a major error in judgment that will harm the credibility of challenger banks on a global scale. Without sufficient regulatory oversight, fintech will remain vulnerable to entering partnerships with unsustainable companies."
In a statement to Newsweek following a recent lawsuit, an Evolve spokesperson said they were "glad that Evolve was not singled out for this action."
"Since identifying significant irregularities in the end-user balances reported by Synapse to Evolve and the other banks that had worked with Synapse, we have been committed to reconciling hundreds of millions of transaction records to reconstruct these balances," the spokesperson said.
Ritter shared her personal experiences in a video to her TikTok account @abby.ritter8, where she described it as "my bank is holding my money hostage."
She said in her video that she worried part of the reason it wasn't a massive scandal was because it was "so complicated" people weren't talking about it.
"But I just wanted to put it out there that I'm involved, in case anyone else on here is, or cares."
And her video broke through the noise, with hundreds of likes since being shared on November 6, with one user saying they were "in the same boat" and were "straight robbed. I can't believe this isn't a bigger lawsuit."
"I feel like Reddit is the only place talking about and I'm like why aren't there more people talking about it?" another said, as one admitted: "I have 30k with them and I am sick to my stomach. I don't think I'm going to get any of it back."
The Evolve spokesperson continued to Newsweek: "It has been a long road for everyone involved, but the right road, and we are proud to have completed this exhaustive reconciliation process, which we believe was the responsible course of action to properly return end user funds.
"Now that Ankura has completed their analysis and reconciliation, we have again offered to coordinate with other banks to share transaction data, enabling them to reconstruct end-user balances using reliable information—not the flawed Synapse data—and accurately return funds to end users.
"We hope they will join us in these efforts to determine where end users' funds are and get them back to end users."
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