--- title: "Regulatory actions involving Synapse and its partner banks" language: en canonical: https://dossiertwist.com/dossiers/synapse-financial-technologies/regulators/ as_of: 2026-10-15 keywords: ["Synapse Financial Technologies","SynapseFi","Synapse Payments","Synapse Brokerage","Synapse Credit","Sankaet Pathak","Evolve Bank & Trust","Evolve Bancorp","AMG National Trust","Lineage Bank","Mercury","Yotta Technologies","banking-as-a-service","FBO accounts","Chapter 11","Jelena McWilliams","TabaPay","CFPB stipulated judgment","FINRA expulsion","end-user funds shortfall"] --- # Regulatory actions involving Synapse and its partner banks **Question.** Which regulators acted against Synapse and its banks, and with what result? **Answer.** Before its collapse Synapse settled a New Hampshire money-transmission case by consent in 2020, and Connecticut moved to refuse renewal of Synapse Credit's licence in 2022. In 2024 Lineage Bank and Evolve consented to orders on their fintech partnerships and, in Evolve's case, anti-money-laundering and sanctions compliance. In 2025 the CFPB's case ended in a stipulated judgment, in which the trustee and the debtor neither admitted nor denied the allegations, that bars Synapse from handling consumer funds; the CFPB said the judgment let it compensate harmed consumers from its Civil Penalty Fund, which has since allocated money for Synapse victims. ## Early state actions - Analysis: In a consent order in Case No. 16-041, filed in June 2020, the New Hampshire Banking Department contended that SynapseFi, formerly Synapse Payments LLC, had carried out 1,187 unlicensed money transmissions for New Hampshire entities from at least 2015 to 2017, collecting $82.60 in fees, and noted that the company had cooperated fully and stopped in 2017. Waiving a hearing, the company agreed by consent to continue refraining from unlicensed transmission, to amend its third-party contracts so that it was not positioned to transmit money and to pay a fine of $1,582.60; Sankaet Pathak signed as chief executive. [src-039] [src-038] - Analysis: On September 26, 2022 Connecticut's Banking Commissioner, Jorge L. Perez, notified Synapse Credit LLC that he intended to refuse to renew its small loan licence and of its right to a hearing: its renewal application of December 30, 2021 was pending because it had filed only unaudited statements instead of audited statements for 2020 and 2021, had not answered a compliance letter of May 5, 2022 and had not surrendered the licence. The notice went to Michael Rasic as chief financial officer and chief business officer. No later decision on the renewal is in the record. [src-015] ## Orders against partner banks - Analysis: On January 30, 2024 the FDIC issued a consent order against Lineage Bank of Franklin, Tennessee (FDIC-23-0041b); the bank consented without admitting or denying charges of unsafe or unsound practices in its third-party risk management program and its fintech partnerships. Its board must receive monthly reports on fintech partners' FBO-account and ACH activity and the effect on capital and liquidity, formalise due diligence before accepting new fintech partners and commission an independent look-back, from September 1, 2022, at all activity in the account of its largest fintech partnership to identify suspicious activity. The order names neither the fintech partners nor that partnership. [src-055] - Analysis: On June 11, 2024 the Federal Reserve Board and the Arkansas State Bank Department issued a cease-and-desist order, by consent, against Evolve Bancorp, Inc. and Evolve Bank & Trust (Docket Nos. 24-012-B-HC and 24-012-B-SM). It recites examinations of August 2023 and January 2024 that found deficiencies in risk management and consumer compliance at the bank's Open Banking Division, which served fintech partners, and in anti-money-laundering and sanctions compliance. The bank must ensure that its own and its fintech partners' ledger and sub-ledger responsibilities are clearly defined, including in a business disruption; may not add fintech partners, products or programs to the division without prior supervisory approval; and must give supervisors an analysis of the liquidity impact before exiting a fintech relationship. The bank consented without a formal proceeding or adjudication of any issue of fact or law, and the Federal Reserve said the action was separate from the Synapse bankruptcy. [src-020] [src-087] ## The CFPB's case - Analysis: On August 21, 2025 the CFPB filed an adversary complaint against Synapse within its bankruptcy case (Adv. No. 1:25-ap-01052-MB), together with a proposed stipulated final judgment. Its single count alleged that Synapse, as a service provider to the fintech platforms and to Evolve, engaged in unfair acts or practices under sections 1031 and 1036 of the Consumer Financial Protection Act by failing to keep adequate records of where consumers' funds were and to ensure that those records matched the partner banks' records, so that consumers lost access to their money. The trustee and the debtor neither admitted nor denied the allegations, and the CFPB made none against the trustee. Judge Barash entered the stipulated final judgment on September 12, 2025, without adjudication of any issue of fact or law; the facts alleged are to be taken as true in any proceeding based on it. The judgment permanently bars Synapse from taking part in or assisting deposit-taking, money transmission, custody of funds or payment processing, bars the debtor and the trustee from selling customer information, and imposes a civil money penalty of $1, allowed as a general unsecured claim, which the CFPB said let it use its Civil Penalty Fund to compensate harmed consumers; the CFPB then allocated money from the fund to affected consumers. [src-004] [src-073] [src-101] [src-060] - Analysis: The judgment defines the harm of each affected consumer, anyone with an account at a fintech platform served by Synapse on May 17, 2024, as the difference between that day's balance with the platform and the distributions since paid by Evolve, AMG National Trust or Lineage, plus prejudgment interest. The Civil Penalty Fund allocated $46,248,291 for Synapse victims on November 28, 2025 and a further $8,965,767 on May 29, 2026; Yotta reported that the timing and amounts of the CFPB's payments remained to be determined. [src-101] [src-060] [src-051] ## Rulemaking and other actions - Analysis: On September 17, 2024 the FDIC proposed a rule that would set heightened reconciliation and recordkeeping standards for certain custodial accounts holding commingled customer funds, citing, according to another fintech's annual report, recordkeeping issues connected with Synapse's commingling of customer funds in custodial accounts. [src-100] - Analysis: Further actions concern Synapse's subsidiaries and Yotta: California's DFPI revoked Synapse Credit's lending licence in July 2024 and Synapse Brokerage's broker-dealer certificate in January 2025; FINRA expelled the brokerage in June 2025 and in 2026 settled its disciplinary case against two former officers, Mark Paverman and Jeffrey Stanley; and in May 2026 Yotta stipulated to a DFPI consent order to desist and refrain from deceptive acts or practices under the California Consumer Financial Protection Law, including representing that cash deposits in Yotta accounts were protected against all risks, and agreed to a $1,000,000 penalty. [src-080] [src-079] [src-002] [src-081] [src-009] [src-103] [src-019] [src-082] ## Sources - [src-039] Consent order, In the Matter of Synapse Payments LLC (Case No. 16-041), New Hampshire Banking Department, 2020-06 - [src-038] Document register entry: Synapse Payments LLC, 16-041, Consent Order, New Hampshire Banking Department, 2020-06-19 - [src-015] Notice of intent to refuse to renew small loan license and notice of right to hearing: Synapse Credit LLC, Connecticut Department of Banking, 2022-09-26 - [src-055] Consent order, In the Matter of Lineage Bank (FDIC-23-0041b), Federal Deposit Insurance Corporation, 2024-01-30 - [src-020] Cease and desist order issued upon consent: Evolve Bancorp, Inc. and Evolve Bank & Trust, Board of Governors of the Federal Reserve System and Arkansas State Bank Department, 2024-06-11 - [src-087] Media source · src-087 - [src-004] Enforcement action page: Synapse Financial Technologies, Inc., Consumer Financial Protection Bureau, 2025-09-15 - [src-073] Complaint, CFPB v. Synapse Financial Technologies, Inc. (Adv. No. 1:25-ap-01052-MB), Consumer Financial Protection Bureau, 2025-08-21 - [src-101] Stipulated final judgment and order, CFPB v. Synapse Financial Technologies, Inc., Consumer Financial Protection Bureau, 2025-09-12 - [src-060] Civil Penalty Fund allocations, Consumer Financial Protection Bureau, 2026-05-29 - [src-051] Company statement source · src-051 - [src-100] Fold Holdings, Inc. annual report on Form 10-K for 2025, U.S. Securities and Exchange Commission (EDGAR), 2026 - [src-080] Order revoking Synapse Credit LLC's California Financing Law license, California Department of Financial Protection and Innovation, 2024-07-10 - [src-079] DFPI press release on the $1 million settlement with Yotta Technologies, California Department of Financial Protection and Innovation, 2026-05 - [src-002] BrokerCheck report: Synapse Brokerage LLC (CRD 137662), Financial Industry Regulatory Authority (FINRA) - [src-081] Order revoking Synapse Brokerage LLC's broker-dealer certificate, California Department of Financial Protection and Innovation, 2025-01-22 - [src-009] Regulatory record source · src-009 - [src-103] Disciplinary and Other FINRA Actions, March 2026, Financial Industry Regulatory Authority (FINRA), 2026-03 - [src-019] BrokerCheck report: Jeffrey Alan Stanley, Financial Industry Regulatory Authority (FINRA) - [src-082] Consent order, The Commissioner of Financial Protection and Innovation v. Yotta Technologies, Inc., California Department of Financial Protection and Innovation, 2026-05-15