From Yahoo Finance: 2025-04-09 11:23:00

Evolve Bank & Trust and Lineage Bank are facing a lawsuit over funds connected to the collapse of fintech Synapse. The proposed class action lawsuit accuses the lenders of negligence in monitoring and mismanagement of funds. The lawsuit was filed in response to a jurisdictional challenge raised by Lineage in Colorado last November.

Justus, a South Carolina resident, signed up for an account with Yotta Technologies and deposited funds. Despite showing a balance of $4,420.50, Justus had trouble accessing his funds. The lawsuit claims that the banks lacked access to Synapse’s ledger, leading to mishandling of customer funds.

The lawsuit alleges that both banks were aware of compliance issues before Synapse’s bankruptcy filing. It claims “unjust enrichment” and demands restitution, equitable relief, and injunction ordering defendants to stop business practices. The lawsuit aims to identify where the money went and make class members whole.

After Synapse declared bankruptcy, partner banks began reconciling funds. Yotta Technologies sued Evolve, alleging the lender stole from customers. Evolve completed reconciliation in October and planned fund distributions in November. AMG and Lineage contested Evolve’s findings, claiming accurate reconciliation was impossible due to Synapse’s practices.

Lineage Bank has returned 99% of funds to affected Synapse customers since the collapse. However, many customers still cannot access their deposits. The lawsuit highlights the difficulty customers face in discerning which bank holds their money. Evolve declined to comment on the ongoing litigation.

Read more: Evolve, Lineage Bank face lawsuit over missing funds