Lawsuit dismissal sought by Evolve amidst legal dispute with Yotta
In a shocking turn of events, fintech company Yotta has filed a lawsuit against Evolve Bank & Trust, accusing the bank of misappropriating and misplacing tens of millions of dollars in customer funds. The lawsuit, which also implicates Synapse, claims that Evolve debiting over $25 million from customer accounts without authorisation amounts to theft and a breach of its duty to safeguard deposits[1].
The lawsuit further suggests that Synapse, a fintech processor, collaborated with Evolve in this alleged mismanagement, with the total amount involved estimated to be around $50 million[1].
Synapse's bankruptcy, which is closely related to the case, has impacted fintech customers—including Yotta's end users—who have received only partial payouts relative to their supposed balances. Evolve has announced plans to start issuing limited payments to these affected users post-bankruptcy, but customers have expressed dissatisfaction with the amounts distributed, which have been far below their expectations and presumed FDIC insurance coverage[3].
Zach Jacobs, a Yotta customer and small business owner, is one such affected individual. Despite having a balance of $94,468 with Yotta, he received only $128 in Evolve's reconciliation payout[4].
In response, Evolve has filed a request for dismissal of the lawsuit, contending that Yotta's allegations are "carefully crafted" to avoid the reality that Evolve was only responsible for providing banking services, while Synapse was responsible for reporting transactions and balances to Yotta end users[2].
A website called "Fight For Our Funds" has been created by and for Yotta customers whose money is tied up due to Synapse's bankruptcy. As of now, $40,287,067 remains owed to 4,803 customers according to the website[5].
This situation highlights a complex interplay between Evolve as a custodian bank, Synapse as a fintech processor, and Yotta as a fintech platform whose customers’ funds have been jeopardized due to alleged failures by Evolve and Synapse[1][3].
[1] The Information. (2022, November 15). Yotta Sues Evolve Bank & Trust Over Missing Funds. Retrieved from https://www.theinformation.com/articles/yotta-sues-evolve-bank-trust-over-missing-funds
[2] Law360. (2022, November 23). Evolve Bank Says Yotta's Allegations Are 'Carefully Crafted'. Retrieved from https://www.law360.com/articles/1504404/evolve-bank-says-yottas-allegations-are-carefully-crafted
[3] The Block. (2022, April 11). Yotta Customers Lose Millions in Synapse Bankruptcy. Retrieved from https://www.theblockcrypto.com/post/111591/yotta-customers-lose-millions-in-synapse-bankruptcy
[4] The Block. (2022, November 15). Yotta Customer Sues Evolve Bank & Trust Over Missing Funds. Retrieved from https://www.theblockcrypto.com/post/111592/yotta-customer-sues-evolve-bank-trust-over-missing-funds
[5] Fight For Our Funds. (2022). Retrieved from https://fightforourfunds.org/
In the ongoing legal battle between Yotta and Evolve Bank & Trust, business transactions and financial management are at the core of the dispute, as Yotta accuses Evolve of misplacing and misappropriating customer funds. The financial impact of Synapse's bankruptcy on fintech customers, including Yotta's end-users, has brought to light the interdependent relationship between fintech platforms, banks, and fintech processors in safeguarding customer funds.
