Latest updates on banking and card services

Updated as on June 24, 2024:
Synapse's Chapter 11 trustee presented her third weekly status report to the U.S. federal court on June 21, 2024 detailing the ongoing efforts and progress in ensuring end users get access to their funds. The detailed report is available here.

As per the status report, one of Synapse's partner banks, AMG National Trust, has begun disbursing funds to end users. We are actively collaborating with AMG National Trust to establish exact procedures for distributing funds to Juno platform's end users based on AMG National Trust's reconciliation process. We will promptly notify you once these procedures are finalised.

During the latest hearing, Juno's legal counsel emphasised the urgency of the situation, noting that end users have been unable to access their funds for over five weeks, which is extremely concerning. Juno had agreed with the trustee's recommendation for pro-rata distribution (Option 3), but since the trustee concluded that Synapse's partner banks must make their own distribution choices, Juno has proactively reached out to Evolve Bank & Trust and AMG National Trust.

Furthermore, since Evolve Bank & Trust and Lineage had advocated for pro rata disbursals while their reconciliation efforts continued, we are awaiting instructions from these banks to facilitate pro rata withdrawals but neither of them have given us the next steps so far.

The Chapter 11 trustee highlighted during the hearing that she has written a letter to regulators of the FRB, OCC, FDIC, requesting agency resources to assist end users and depositors understand which Partner Bank holds their funds and facilitating end users’ interaction and communication with relevant Partner Banks and, in the case of the SEC and FINRA, to help field end user inquiries with Synapse Brokerage.

The trustee continues to facilitate partner banks' additional efforts regarding reconciliation and settlement payments. As there are no significant updates expected next week, the trustee has requested an additional two weeks for her next update. We appreciate your patience and will keep you informed of any developments

Update as on June 20, 2024:
Thank you for your patience as we continued to respond to the issues with our previous banking-as-a-service provider ecosystem and the systemic problems that have come to light in the industry generally. We are pleased to share that we’ve found a new banking partner in Jiko to help power the next chapter of Juno into the future, built on the principles of trust and safety.

Our teams have been heads-down and hard at work together, and the integration with Jiko is now complete.

What it means for you
We’re pleased to begin the rollout and welcome you to the next chapter of Juno.

• Once you have access, you can simply create a Juno Treasury Account, powered by Jiko. Simply log in to Juno and apply*. We’ve made it easy to do so right from the Juno app or website.
• From there, you will be able to continue leveraging Juno to get on-chain, and to access essential financial services like bill payments, paychecks, and crypto on- and off-ramps.

What is Jiko?
Jiko is a vertically integrated financial institution, headquartered in San Francisco, that combines its nationally chartered bank and registered broker-dealer to hold your cash in Treasury bills – all in safe custody. Jiko is built from the ground up on principles of transparency, trust, and safety and our companies will be jointly communicating more in the coming weeks.

What about my previous Cash Account?
Your previous Cash Account, provided by Synapse Brokerage LLC and Evolve Bank & Trust, will still be visible on the Juno website and app. We are actively working with the Chapter 11 Trustee to get customers access to the funds in the previous Cash Account as soon as possible.

Creating a new Treasury Account, powered by Jiko, is not a requirement for and won't impact the ongoing process of getting access to the funds in your previous Cash Account.

For more detailed questions and answers, please see our updated help center and FAQ page, and don’t hesitate to reach out to [email protected].

What happened?

On May 7th, 2024
We were notified that Lineage Bank, Member FDIC, halted ACH processing for all Synapse Brokerage accounts, and that Evolve Bank & Trust, Member FDIC, would now process ACH transactions on behalf of Synapse Brokerage. Juno's end users hold accounts with Synapse Brokerage.

On May 11th, 2024
We were notified by Evolve Bank & Trust that they would be immediately halting card payments. They also stopped processing any incoming ACHs and Wires. Please note that both end user account and routing numbers as well as the debit card is issued by Evolve Bank & Trust. These events have left Synapse Brokerage without an ACH processor, and Evolve Bank & Trust’s decision to freeze cards and incoming ACHs and Wires is causing transactions to fail.

On May 13th, 2024
We learned in court proceedings that Evolve Bank & Trust had taken this action because they were unable to access a key dashboard provided by Synapse which according to Evolve Bank & Trust was necessary to perform their duties as a regulated financial institution. Again, we have no control over these actions by Synapse or Evolve Bank & Trust and we learned about this only after Evolve Bank & Trust had already frozen accounts and restricted access to end user funds.

On May 25, 2024
A hearing took place on May 24, 2024, in the US federal court regarding the ongoing dispute between Evolve and Synapse. While the dispute remains unresolved, significant progress was made during the hearing. Jelena McWilliams, the former Chairman of the Federal Deposit Insurance Corporation (FDIC), was appointed as the Chapter 11 Trustee for Synapse. The court instructed Trustee McWilliams to prioritize ensuring end users have access to their funds. Additionally, the court mandated regular weekly updates from the US trustee on the progress being made.

On June 8, 2024
The new Chapter 11 Trustee, Jelena McWilliams, presented her initial report to the US Federal court. Her report detailed out the timeline of events and her interactions with all the relevant stakeholders including partner banks, fintech platforms, regulatory authorities and end users. Her appointment has instilled confidence among fintechs and end users for a swift resolution. Her commitment was highlighted further when she requested a call with the Juno team over the Memorial Day weekend immediately after her appointment. Juno has offered resources at our disposal to help the trustee expedite the process of end user withdrawals.

The trustee has been instructed by the court to prioritize getting users access to their funds as the top priority. In that spirit, the trustee has presented some immediate steps forward while all the Partner Banks continue their reconciliation process, which according to the trustee could take several weeks. From all the options she presented in the hearing, her recommendation is that Partner Banks should release pro rata amounts of end user funds immediately and the remaining balances will not be paid out while reconciliation efforts continue.

The exact process and pro rata amounts eligible for withdrawals are still not known at this time and we await instructions from the trustee for the next steps. As soon as we get instructions from the trustee, our team is ready to execute on the next steps and ensure end users get access to their funds. We will keep you informed about the next steps and any actions you may need to take.

In the hearing, Juno's counsel highlighted that Juno platform's end users continue to remain affected and are still unable to access funds for 4 weeks now. Our counsel also appreciated the progress being made and the urgency shown by the trustee to get users access to their funds. Our counsel also agreed with the trustee's recommendation to provide interim relief to the end users by releasing pro rata amounts immediately while final reconciliation continues. This provides end users access to funds in the most equitable manner.

On June 18, 2024
Synapse Chapter 11 Trustee, Jelena McWilliams, presented the second status report to the US Federal court in the Synapse bankruptcy hearing held on June 14, 2024. The report talks about the ongoing reconciliation between Synapse’s partner banks and her focus on ensuring end users have access to their funds as soon as possible.

The Trustee’s earlier recommendation was to provide interim relief to end users by releasing pro rata amounts immediately while final reconciliation continued. In the latest report, the Trustee highlighted that on June 11, 2024, she communicated to the Partner Banks that she does not have authority to direct the Partner Banks’ distribution of end user funds. She mentioned that the Partner Banks should proceed with regards to the end user funds as they deem appropriate and on advice of their respective legal counsel.

The Trustee also shared that she has notified regulators which regulate Synapse’s partner banks which include Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board (FRB) and Office of the Comptroller of the Currency (OCC). She offered to work closely with these regulatory agencies while also requesting these agencies to provide regular updates on their website about the ongoing work they are doing with Synapse’s partner banks.

During the hearing, the Trustee estimated that most achievable efforts with regards to reconciliation may be completed in the next two weeks. Juno continues to work with the Trustee and we have offered all the resources at our disposal in ensuring swift resolution and helping end users get access to their funds.

Please note that Juno does not or has never held end user funds and hence we have limited visibility in the ongoing issues and reconciliation process. We are sharing what we are made aware of or what is publicly available. We are awaiting instructions from the Trustee or Synapse’s partner banks as to the exact placement of end user funds and the process for disbursal of end user funds. As and when we have confirmation from the Trustee or Synapse’s partner banks we will promptly share that information with customers.

How does this impact you?

1. All programs that work with Synapse are impacted by this. Incoming & Outgoing ACH transfers, Incoming Wire Transfers and card transactions will not go through until the banks restore their services. Direct deposits and other incoming transfers will be returned back to the source during this period.

2. As stated in your brokerage account customer agreement, customer funds in the Synapse Brokerage Program are deposited in a network of member FDIC banks. Funds held in these banks are eligible for FDIC insurance up to $250,000 for each individual account. Funds held with Synapse Brokerage LLC also have SIPC insurance up to $500,000, including $250,000 for cash, for each individual account.

Please note that Synapse Financial Technologies, Inc., has filed for Chapter 11 and not Synapse Brokerage LLC. Evolve Bank & Trust in a recent press release, has stated that “As a robustly well-capitalized FDIC institution exceeding the capital thresholds for the highest category of capitalization under PCA (“well capitalized”), our primary focus is on ensuring the protection of end user funds."

Where are the funds and when can end-users get access to their funds?

We know this is frustrating for you, but we currently lack sufficient information regarding the exact location of the end-user funds. We understand the importance of this matter and are working around the clock to get ACH and card processing restored, which will enable customers to transact. Ultimately, it is up to Evolve Bank & Trust to restore card services, and Lineage or Evolve Bank & Trust or another processing bank to restore ACH services.

What we are doing about it

1. Juno, on May 17, 2024, also represented end-user concerns to the federal US court overseeing these issues between Synapse and Evolve Bank & Trust. The court has directed the parties involved to meet and confer and find a resolution. The court felt that fintechs like Juno had no role to play in being a part of this mediation process to reach a resolution. Since then, our legal counsel has continued to represent end users' concerns in multiple bankruptcy hearings.

2. Our compliance team has reached out to the Federal Reserve Board which regulates Evolve Bank & Trust and FINRA which regulates Synapse Brokerage LLC to make them aware of this situation.

3. We are also working on providing a new treasury account for users so that you can start getting your direct deposits, pay bills or buy crypto again. Our team is working tirelessly in the interest of our users and community. We hope to provide these new accounts to users in the coming weeks.

This entire situation has been incredibly difficult and frustrating for us as well and the entire team who has been caught in the crosshair of an ongoing issue between Synapse and Evolve Bank & Trust. We have had very limited visibility and information of the whole situation and our team is only communicating what we are made aware of or what is publicly available. Juno is a financial technology company, not a bank. We do not custody cash or crypto and work with regulated partners to provide these services.

We are as disappointed as you are with these sequence of events. This has been extremely difficult for our team and our business. We understand that the trust of our customers, which we have worked incredibly hard for over the years, has been severely impacted. We are going to work extremely hard to regain your trust and rebuild our business. Please remember that every single member of our team is completely dedicated to serving you and your interests. Our team is working nights and weekends to figure out a solution and create an alternative path to restore access to essential financial services.

Over the last 6 months we have attempted several times to diversify our banking stack and even spent 3 months of engineering resources to integrate with a new partner. Given that our platform offers crypto adjacent services, it has been incredibly difficult to get a final approval from a bank partner to onboard customers. This is a broader problem specific to the crypto industry due to the current regulatory climate not being favourable to crypto or crypto adjacent companies.

If you have any questions or need any assistance, please feel free to reach out to our support team. Our support team is working round the clock to answer your questions and share whatever information is available to us.

*Approval for a Jiko account, which powers the Juno Treasury Account, involves compliance with US banking regulations. The creation of a Jiko account is subject to such approval.