Evolve Bank & Trust: Update on Ledger Reconciliation and Release of End User Funds

Updated November 13, 2024

Evolve Bank & Trust (“Evolve” or “Bank”) is providing this update to the Trustee and parties in interest documenting the Bank’s progress in performing a reconciliation that, once completed, will enable Evolve to distribute end user funds in its possession in a safe and sound manner, and in compliance with applicable law.

Evolve Has Begun Distributing Funds to Synapse Brokerage End Users 

As previously reported, the Bank engaged Ankura Consulting Group (“Ankura”) to perform a reconciliation to inform the distribution of the funds held by Evolve that belong to end users of Synapse Brokerage. The reconciliation was completed on schedule on October 18, 2024. 

The reconciliation has been essential to allowing Evolve to return the funds it owes to Synapse Brokerage end users in a safe and sound manner, based on accurate accounting. We appreciate the patience and understanding of all impacted parties as we navigated this complex and frustrating situation. 

On October 23, 2024, Evolve launched a resource center, including a website and dedicated call center, to facilitate communications with end users and the public regarding Evolve’s distribution efforts. 

On November 4, 2024, Evolve sent email notices to approximately 118,000 Synapse Brokerage end users with instructions for logging into reconciliationbyevolve.com (“Reconciliation Website”) to view their individualized results from the reconciliation. For each of these end users, the Reconciliation Website displays two amounts: 

  1. Their reconstructed Synapse ecosystem balance, which is the end user’s total balance across all institutions in the Synapse ecosystem as of May 17, 2024; and 
  2. Their Evolve payment, which is based on the end user’s reconstructed Evolve balance as of May 17, 2024. The Evolve payment also accounts for any interest owed by Evolve under the end user’s demand deposit agreement with Evolve (if applicable), as well as any distribution(s) that Evolve understands the end user has received from other ecosystem banks. 

End users with Evolve payment amounts of less than $100 received payments directly through an online payment service. End users with Evolve payments of $100 or more are able to use the Reconciliation Website to select a payment method which may include ACH transfer, wire, or check, among others. Any end user owed a payment from Evolve who does not claim their payment by December 4, 2024, will receive a check that will be sent on or about December 19, 2024. 

As of November 11, 2024, Synapse Brokerage end users have received directly through an online payment service or selected a payment method to receive over $21 million in funds from Evolve. For those who selected a payment method, Evolve is in the process of distributing those funds. End users from a variety of fintech platforms, including Juno/OnJuno, YieldStreet, Yotta, and Clerkie, have all made payment elections. The option to elect a preferred payment method will be available until December 4, 2024, after which Evolve will prepare checks to distribute funds to any end users who are owed a payment from Evolve and have not elected a payment mechanism. 

For those individuals who disagree with the reconciliation’s findings with respect to their own account, Evolve has established an online appeal process on the Reconciliation Website. As of November 11, 2024, less than 4.3% of Synapse Brokerage end users have submitted an appeal regarding their reconstructed ecosystem balance and/or Evolve payment. 

Evolve Stands Ready to Work With Other Ecosystem Banks on Transaction-Level Reconciliation 

Ankura’s reconciliation confirmed that there were material irregularities and inaccuracies in the ledgers that Synapse provided to Evolve for Synapse Brokerage accounts. Indeed, Ankura’s work showed that Synapse’s ledgers were contradicted by Synapse’s own transaction data and by transaction data from the Federal Reserve and Evolve’s own records. In other words, as Evolve observed early in the Synapse bankruptcy process, Synapse’s ledgers were wrong. 

As a result of these inaccurate ledgers, we know that there are Synapse Brokerage end users who still have questions about their balances and the institution(s) that owe them. This is why from the outset Evolve strongly advocated for a comprehensive, ecosystem-wide reconciliation of end user balances, overseen by the Synapse Trustee, to accurately calculate each end user’s ecosystem balance and which Synapse ecosystem banks held their funds. And when we engaged Ankura, we worked with them to develop a project scope that we hoped would broadly address end users’ questions, including which institution(s) held their balances. 

Unfortunately, other Synapse partner banks chose not to participate in Evolve’s reconciliation, and we had to go at it alone. This meant that Ankura ultimately was unable to determine the location of end user funds in the Synapse ecosystem, beyond what funds were held at Evolve. That is because Ankura did not have access to transaction-level data from other Synapse ecosystem banks, and the location of end users’ funds could not be determined with just transaction data from Synapse and Evolve. We understand that this may have caused some confusion for end users and other stakeholders regarding the reconciliation’s scope and output, and we apologize that our explanation of the challenges and data needed was not clearer. 

That said, Evolve has invested substantially in reconstructing end users’ ecosystem balances and Ankura’s work can be used to reconstruct end user balances at other institutions. To this end, Evolve has already offered to share its transactional data with other ecosystem banks, and we are hopeful they will collaborate with us to help end users whose balances remain outstanding locate their funds in the Synapse ecosystem. 

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As Evolve’s distribution process moves forward, it is helpful to remember that Evolve is just one piece of the puzzle. Before Synapse went bankrupt, it was the intermediary between multiple banks and numerous fintech companies, which had the relationship with end users. In this role, Synapse placed money held on behalf of end users at multiple ecosystem banks, and then directed the transfer of funds between them. Synapse was responsible for tracking the movement and location of those funds by maintaining accurate ledgers across its ecosystem. It failed to satisfy this critical obligation. 

We know that the former CEO of Synapse has alleged, despite a third-party reconciliation process, that Evolve still has the remaining funds, which would conveniently solve the problem of his inaccurate ledgers. But the reality, as shown by Ankura’s analysis, is that this is simply not true. 

As a result, unfortunately, end users now have only a partial answer to the question: where is my money? Evolve is in the process of distributing the end user balances it held, and we encourage other Synapse ecosystem banks to share their transaction data to help end users determine the location of their funds. 

We appreciate the opportunity to provide this update to the Trustee, the Court, and all interested parties. 

Updated October 22, 2024

The Reconciliation is Complete

As previously reported, the Bank engaged Ankura Consulting Group (“Ankura”) to perform a reconciliation to inform the Bank’s distribution of the funds held by Evolve belonging to end users of Synapse Brokerage LLC (“Synapse Brokerage”). Synapse Brokerage is a subsidiary of the bankrupt entity Synapse Financial Technologies, Inc. (“Synapse”). Synapse Brokerage end user funds held by Evolve are related to the Bank’s payment processing activities for Synapse Brokerage end users following their fintech platforms’ migration from Evolve to Synapse Brokerage in Fall 2023.

The reconciliation has been a monumental effort. From collecting ~10 terabytes of data from Synapse’s MongoDB database, to digesting more than 100 million transaction records from Synapse data, Evolve data, and Federal Reserve transaction records, the dedicated team at Ankura has worked tirelessly since August to reconstruct the balances at Evolve for Synapse Brokerage end users, as well as these end users’ total balances across the Synapse ecosystem. The reconciliation was completed on schedule on October 18, 2024. Evolve is now preparing to distribute end user funds in accordance with the results of Ankura’s analysis.

Evolve appreciates the patience of Synapse Brokerage end users through this process. As explained in prior updates, the reconciliation was necessary because Synapse failed to satisfy its contractual obligation to maintain, and to provide to Evolve, a complete and accurate ledger. As previously disclosed to the Trustee, the Bank had identified significant irregularities in Synapse’s ledgers that indicate the account balances set forth therein were materially inaccurate, and could not be used as the basis for distributing funds to end users. Evolve therefore determined that it was necessary to perform a reconciliation and reconstruct the potentially inaccurate end user balances in the flawed Synapse ledger before distributing funds to end users. The results of the reconciliation confirm that there were flaws in the Synapse ledger requiring a reconstruction of Synapse Brokerage end user balances.

Funds Distribution

To facilitate the return of funds held at Evolve to end users, Evolve has hired Rust Consulting, an Exela Technologies brand, to serve as the administrator to disburse funds to end users of Synapse Brokerage that the Bank has held since the Synapse bankruptcy. On October 23, 2024,  more  information  on  how  Rust  will  distribute  funds  will  be  available  at reconciliationbyevolve.com, and an email will be sent to end users. Evolve will also launch a resource center at reconciliationbyevolve.com to provide more information about the reconciliation and the anticipated timeline for returning funds held at Evolve to Synapse Brokerage end users. Payments to Synapse Brokerage end users with a balance owed by Evolve will begin on November 4, 2024.

Updated October 19, 2024

Evolve Bank & Trust today announced Ankura has reached a milestone in its reconciliation process, which will allow Evolve to move forward in its efforts to return funds to Synapse Brokerage end users impacted by the Synapse bankruptcy.

“Evolve has been deeply committed to the reconciliation of Synapse Brokerage end-user funds since we identified significant irregularities in end-user balances reported by Synapse,” said Scot Lenoir, Founder, Evolve Bank and Trust. “First and foremost, we are grateful to the end users for their patience and understanding as we worked through millions of transactional records in the reconciliation process.”  We are grateful for the invaluable expertise of Ankura, who has been instrumental in this complex process. We also extend our sincere thanks to Bankruptcy Judge Martin Barash and Bankruptcy Trustee Jelena McWilliams for their unwavering support and dedication to this process, and to B. Riley for their partnership in collecting the data necessary to perform this reconciliation.”

Evolve is now preparing to return funds held at Evolve to Synapse Brokerage end users. On October 23, 2024, Evolve will launch a resource center at reconciliationbyevolve.com to provide more information on the reconciliation and the anticipated timeline for returning funds held at Evolve to Synapse Brokerage end users.

To facilitate the return of funds held at Evolve to end users, Evolve has hired Rust Consulting, an Exela Technologies brand, to serve as the administrator to disburse funds to end users of Synapse Brokerage that the Bank has held since the Synapse bankruptcy. On October 23, 2024, more information on how Rust will distribute funds will be available at reconciliationbyevolve.com and an email will be sent to end users. 

End users with a balance at Evolve will be asked to select a payment method elections on November 4, 2024, and payments will begin shortly thereafter.  

Updated September 24, 2024

The Bank continues to engage Ankura Consulting Group (“Ankura”) to perform a reconciliation that will inform the Bank’s distribution of approximately $46 million in funds belonging to end users of Synapse Brokerage LLC (“Synapse Brokerage”). Synapse Brokerage is a subsidiary of the bankrupt entity Synapse Financial Technologies, Inc. (“Synapse”). As noted in prior updates, the Synapse Brokerage end user funds held by Evolve are related to the Bank’s payment processing activities for Synapse Brokerage end users following their fintech platforms’ migration from Evolve to Synapse Brokerage in Fall 2023. The Bank additionally holds approximately $35.3 million in reserve funds that it will distribute to end users if the reconciliation determines that such distribution is appropriate.

The reconciliation, which has been underway for weeks and is on track for completion by October 18, 2024, is necessary because Synapse failed to satisfy its contractual obligation to maintain, and to provide to Evolve, a complete and accurate ledger. As previously disclosed to the Trustee, the Bank has identified significant irregularities in Synapse’s ledgers that indicate the account balances set forth therein are materially inaccurate, and cannot be used as the basis for distributing funds to end users. The reconciliation that Ankura is performing will determine (1) which Synapse Brokerage end users have funds at Evolve, and (2) for those Synapse Brokerage end users with funds at Evolve, how much is owed to each end user.

In parallel with Ankura’s reconciliation work, Evolve is preparing to make the appropriate distributions as quickly as possible following the completion of the reconciliation work. To that end, the Bank is currently in the process of engaging a third-party administrator to assist with implementing Evolve’s distribution plan. Key responsibilities of the administrator will include validating end users’ identity and account information so funds are distributed as efficiently and accurately as possible. Evolve is committed to clear and proactive communication with Synapse Brokerage end users and fintech partners throughout the distribution process.

Evolve appreciates the patience of all impacted parties as the reconciliation proceeds, and will provide updates on this site.

Updated September 13, 2024

Evolve Bank & Trust (“Evolve” or “Bank”) is providing this update to the Trustee and parties in interest documenting the Bank’s progress in performing a reconciliation that, once completed, will enable Evolve to distribute end user funds in its possession, in compliance with applicable law.

I. Background

As explained in prior updates to the Trustee and the Court, Evolve is holding approximately $46 million in funds belonging to end users of Synapse Brokerage LLC (“Synapse Brokerage”), a subsidiary of the bankrupt entity Synapse Financial Technologies, Inc. (“Synapse”). These end user funds are held by Evolve in connection with the Bank’s payment processing activities for Synapse Brokerage end users following their fintech platforms’ migration from Evolve to Synapse Brokerage in Fall 2023. The Bank additionally holds approximately $35.3 million in reserve funds that it will distribute to end users if the reconciliation determines that such distribution is appropriate.

As detailed in prior updates, Synapse had a contractual obligation to maintain, and to provide to Evolve, a complete and accurate ledger. However, the Bank has identified significant irregularities in Synapse’s ledgers that indicate the account balances set forth therein are materially inaccurate, and cannot be used as the basis for distributing funds to end users. Therefore, Evolve determined that a reconciliation was necessary to determine (1) which Synapse Brokerage end users have funds at Evolve, and (2) for those Synapse Brokerage end users with funds at Evolve, how much is owed to each end user.

The Bank has engaged Ankura Consulting Group, LLC (“Ankura”), a third-party firm with strong expertise in complex accounting and reconciliation matters, to lead the reconciliation on the Bank’s behalf. Ankura’s work has been underway for weeks, and a status report containing an update on recent progress is below.

II. Reconciliation Status Report

Ankura continues to make progress toward completing a Reconciliation Plan that will take account of Synapse Brokerage end-user transactions in and out of Evolve and allow the Bank to determine (1) which Synapse Brokerage end users have funds at Evolve, and (2) the amount of their funds at Evolve.

Per the Bank’s prior updates, the essential components of this Reconciliation Plan are:

  • Collection of Synapse’s account and transaction data;
  • Analysis of this data, along with Evolve’s own data, to track the flow of funds into and out of Synapse Brokerage end users’ accounts; and
  • Calculation of the end-users’ actual balances at Evolve.

Ankura has completed the transfer, restoration, and validation of the databases necessary to perform the reconciliation. As noted in prior updates, this process involved working with the Trustee and the Trustee’s service provider to extract, copy, transfer to Ankura, and restore more than 100 databases maintained by Synapse, comprising nearly 10 terabytes of data. Ankura has separately obtained access to millions of Evolve’s transactional records.

With record collection and database restoration completed, Ankura is currently diligently analyzing the contents of the Synapse databases and Evolve’s records to reconcile account-by-account, transaction-by-transaction activity with reported account balances over time. Consistent with prior updates, the anticipated timeline for completing the reconciliation, starting from the collection of the necessary data (substantially complete as of August 23, 2024), is approximately eight weeks, subject to possible contingencies. This means that we expect the reconciliation to be completed by October 18, 2024.

Updated: August 30, 2024

Evolve Bank & Trust (“Evolve” or “Bank”) is providing this update to document the Bank’s recent progress in performing a reconciliation that, once completed, will enable Evolve to distribute end user funds in its possession, in compliance with applicable law. 

Evolve’s Priority is the Accurate Distribution of End User Funds 

Every day, Evolve hears from Synapse Brokerage LLC (“Synapse Brokerage”) end users seeking access to their funds. Their stories – shared with the Bank’s customer service representatives, social media, government agencies, and the Court – speak to end users’ significant distress and frustration with the situation that has unfolded since Synapse Financial Technologies, Inc. (“Synapse”) filed for Chapter 11 bankruptcy on April 22nd. Evolve understands the urgency to distribute end user funds held by the Bank, and is working as quickly as possible, using internal and third-party resources and expertise, to calculate accurate balances and distribute the funds it holds to the correct end users. 

Update on Ledger Reconciliation and Release of End User Funds

As explained in prior updates to the Trustee and the Court, Evolve is holding approximately $46 million in funds belonging to end users of Synapse Brokerage LLC (“Synapse Brokerage”), a subsidiary of the bankrupt entity Synapse Financial Technologies, Inc. (“Synapse”). These end user funds are held by Evolve in connection with the Bank’s payment processing activities for Synapse Brokerage end users following their fintech platforms’ migration from Evolve to Synapse Brokerage in Fall 2023. The Bank additionally holds approximately $35.3 million in reserve funds that it will distribute to end users if the reconciliation determines that such distribution is appropriate.

Importantly, Evolve was not a program bank of Synapse Brokerage. Rather, Evolve’s role as payment processor following the Synapse Brokerage migration was intended to facilitate an orderly transition of end users away from Evolve as the relationship between Evolve and Synapse wound down beginning in September 2023. Following migration, Synapse Brokerage end users’ accounts at Evolve had a balance of $0, as their funds were transferred to AMG National Trust, a banking services provider to Synapse Brokerage, at Synapse’s instruction on end users’ behalf.

Evolve’s limited role with respect to Synapse Brokerage end users was confirmed by Yotta’s CEO on October 27, 2023, following the migration of Yotta end users from Evolve to the Synapse Brokerage cash management program: (Click Here to view Yotta End User Notification referenced in below email.)

The Need for Reconciliation

Synapse had a contractual obligation to maintain, and to provide to Evolve, a complete and accurate ledger. However, the Bank has identified significant irregularities in Synapse’s ledgers that indicate the account balances set forth therein are materially inaccurate, and cannot be used as the basis for distributing funds to end users. For example:

  • The April 29, 2024 ledger provided to Evolve by Synapse showed, for one Synapse Brokerage platform, an increase of approximately $85 million in end user funds at Evolve in one day, when during that period Evolve received only $2,686,233 of incoming end user funds.
  • The April 30, 2024 ledger provided to Evolve by Synapse also showed, for another Synapse Brokerage platform, a one-day decrease of more than $21 million in end user funds – but Synapse only instructed Evolve to send (and it only sent) $814,132 in outgoing end user funds during this period.

Evolve notes that based on the information provided in the Appendices to prior status reports submitted by the Trustee, it is not the only Synapse ecosystem bank that has observed material errors, contradictions, and irregularities in Synapse’s ledgers. As Evolve has previously stated, without an accurate ledger, the Bank does not have the two essential pieces of information it needs to distribute end user funds in its possession:

  1. Which Synapse Brokerage end users have funds at Evolve?
  2. For those Synapse Brokerage end users with funds at Evolve, how much does the Bank owe to each end user?
    Evolve is confident that the reconciliation will provide both pieces of information, and will enable the Bank to accurately distribute end user funds to the appropriate Synapse Brokerage end users, in the correct amounts. The Bank has engaged Ankura Consulting Group, LLC (“Ankura”), a third-party firm with strong expertise in complex accounting and reconciliation matters, to lead the reconciliation on the Bank’s behalf. Ankura’s work has been underway for weeks, and a status report of Ankura’s recent progress on the reconciliation is provided below.

Reconciliation Status Report

Ankura was retained on July 29, 2024 to assist the Bank with its Data Collection and Reconciliation Plan and initiated its work on July 30, 2024. As detailed in the Bank’s prior update, the Reconciliation Plan will take account of Synapse Brokerage end user transactions in and out of Evolve and allow the Bank to determine (1)
which Synapse Brokerage end users have funds at Evolve, and (2) the amount of their funds at Evolve.
Per the Bank’s prior update, the essential components of this Reconciliation Plan are:

  • Collection of Synapse’s account and transaction data;
  • Analysis of this data, along with Evolve’s own data, to track the flow of funds into and out of Synapse Brokerage end users’ accounts; and
  • Calculation of the end users’ actual balances at Evolve.

Per the Bank’s prior update, this Reconciliation Plan is necessary because the ledgers that Synapse provided to Evolve are incorrect. Ankura has made substantial progress to date. In the four weeks since being retained, Ankura’s work has included but not been limited to:

  • Gathering information from Evolve and its personnel about its relationship with Synapse and transactions in support of that relationship;
  • Identifying the dozens of Evolve accounts through which Synapse-related transactions were conducted (distinct from end user accounts that were maintained by Synapse);
  • Obtaining access to and analyzing millions of Evolve’s transactional records relating to activity in these accounts for the time period at issue (ongoing);
  • Developing analytical models to support the Reconciliation Plan (ongoing);
  • Working with Evolve’s records to reconcile account-by-account, transaction-bytransaction activity with reported account balances over time (ongoing);
  • Working extensively with representatives of the Trustee to extract, copy, and transfer to Ankura dozens of databases (approximately 10 terabytes of data) maintained by Synapse; and
  • Restoring those databases maintained by Synapse in Ankura’s environment to establish continuous and unrestricted access to Synapse data for the purpose of the Reconciliation.

As noted in the Bank’s Prior updates, the Reconciliation Plan involves substantial complexities. As one example:

  • Ankura has worked closely with representatives of the Trustee, as noted above, to gain access to dozens of databases maintained by Synapse, which include the ledger activity and transactional records relating to end users’ accounts (distinct from the Synapse-related omnibus accounts maintained by Evolve).
  • Ankura began working with the Trustee’s representatives on the evening of August 6, 2024 to plan and execute the extraction, copying, and transfer to Ankura of these databases, which represent one component of the Reconciliation Plan and taken together comprise approximately 10 terabytes of data.
  • Ankura and the Trustee’s service provider initiated the complex process of extracting, copying, and transferring these dozens of databases on August 7, 2024 and following a nearly continuous effort completed the full transfer in the evening of Friday, August 23, 2024.
  • The Ankura team completed the restoration of these dozens of databases in Ankura’ environment and is coordinating with the Trustee’s service provider to validate that the databases were successfully transferred (i.e., what was received aligns with the original). The successful receipt and restoration of these databases enables Ankura to undertake its review and analysis of the relevant Synapse records.
  • As noted previously, there do not appear to be any system documentation, “data dictionaries,” user guides, or similar materials maintained by Synapse that might
  • provide some type of roadmap for these dozens of databases. This may make the analysis more complicated and time-consuming.

Consistent with earlier communications, the anticipated timeline from the collection of the necessary data (substantially complete as of August 23, 2024) is approximately eight weeks, subject to possible contingencies.

August 15, 2024

Reconciliation Progress 

As explained in our July 31st update, a reconciliation is necessary because Synapse – the technology provider at the center of the Synapse ecosystem – provided inaccurate ledgers that reflected end user balances at Evolve that do not align with the actual flow of funds into and out of the Bank. Without an accurate ledger, Evolve does not have the two essential pieces of information it needs to distribute funds: 

  1. Which Synapse Brokerage end users have funds at Evolve? 
  2. For those Synapse Brokerage end users with funds at Evolve, how much does the Bank owe to each end user?

On May 24th, former FDIC Chairman Jelena McWilliams was appointed as Trustee of Synapse, replacing the Synapse management team responsible for the inaccurate ledgers provided to the Bank. The appointment of a Trustee has allowed Evolve and other Synapse ecosystem banks access to crucial Synapse information that previously had either been cut off (e.g., statements available from the Synapse Dashboard) or entirely unavailable (e.g., the Synapse MongoDB database), enabling Evolve to move forward with our reconciliation and resolution efforts. 

As previously disclosed, Evolve has engaged Ankura Consulting Group, a third-party firm with strong expertise in complex accounting and reconciliation matters, to lead this reconciliation. An update from Ankura is provided below. As noted in Ankura’s report, data 2 collection, which has been a monumental undertaking given the size of Synapse’s MongoDB database, is nearing completion, and analysis of the data already collected is underway. 

For example, since Evolve’s last update, the Bank has collected, identified, and begun analyzing the Synapse database showing the migration of approximately $650 million in Synapse Brokerage end users’ funds from Evolve to the Synapse Brokerage cash management program in Fall 2023.* This information is critical to tracking the flow of end user funds across the Synapse ecosystem, and to calculating the end user-specific balances at Evolve as a result of the Bank’s payment processing activities following migration.** Note that following the migration, Synapse Brokerage end users’ accounts at Evolve had a balance of $0, as their funds were transferred to AMG National Trust, a banking services provider to Synapse Brokerage, at Synapse’s instruction on end users’ behalf. 

Evolve is committed to provide updates to the Court and the public as the reconciliation progresses. The update from Ankura below provides additional information about the current status of this important work. 

*Evolve had no role in decisions made by Synapse’s fintech platforms to migrate from the Evolve program to the Synapse Brokerage cash management program.  

**As noted in prior updates, Evolve was not a program bank of Synapse Brokerage, and is holding funds as a result of payment processing activities that the Bank continued to perform for Synapse Brokerage end users following their migration to the Synapse Brokerage cash management program.  

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Ankura Consulting Group Status Report for Synapse Trustee 

August 14, 2024

Ankura was retained on July 29th to assist the Bank with its Data Collection and Reconciliation Plan and initiated its work on July 30th. 

As detailed in the Bank’s most recent update, the Reconciliation Plan will take account of Synapse Brokerage end-user transactions in and out of Evolve and allow the Bank to determine (1) which Synapse Brokerage end users have funds at Evolve, and (2) the amount of their funds at Evolve. 

Per the Bank’s prior update, the essential components of this Reconciliation Plan are: 

  • Collection of Synapse’s account and transaction data; 
  • Analysis of this data, along with Evolve’s own data, to track the flow of funds into and out of Synapse Brokerage end users’ accounts; and 
  • Calculation of the end-users’ actual balances at Evolve. 

Per the Bank’s most recent update, this Reconciliation Plan is necessary because the ledgers that Synapse provided to Evolve are incorrect. 

Ankura has made rapid progress to date. In the two weeks since being retained, Ankura’s work has included but not been limited to: 

  • Gathering information from Evolve and its personnel about its relationship with Synapse and transactions in support of that relationship; 
  • Identifying the dozens of Evolve accounts through which Synapse-related transactions were conducted (distinct from end-user accounts that were maintained by Synapse); 
  • Obtaining access to and analyzing millions of Evolve’s transactional records relating to activity in these accounts for the time period at issue (ongoing); 
  • Developing analytical models to support the Reconciliation Plan (ongoing); and 
  • Working extensively with a service provider of the Trustee to gain access to dozens of databases maintained by Synapse (ongoing). 

As noted in the Bank’s prior updates, the Reconciliation Plan involves substantial complexities. As one example: 

  • Ankura has been working closely with a service provider of the Trustee, as noted above, to gain access to dozens of databases managed by Synapse, which include the ledger activity and transactional records relating to end-users’ accounts (distinct from the Synapse-related omnibus accounts maintained by Evolve). 
  • Pursuant to a negotiated agreement between Evolve and the Trustee, Ankura began working with the Trustee’s service provider on the evening of August 6th to plan and execute the transfer to Ankura of copies of these databases, which represent one component of the Reconciliation Plan and taken together comprise approximately 10 terabytes of Synapse data. 
  • Moreover, Ankura understands no pre-existing Synapse system documentation or “data dictionaries” are available for these databases, which is somewhat akin to not having a table of contents for a set of encyclopedias; 
  • Ankura and the Trustee’s servicer provider have been copying these dozens of databases on a virtually continuous basis since August 7 and as of noon Eastern on August 14, they have successfully copied and transferred 22 of 24 “clusters” of data. 

Notwithstanding the complexities involved, Ankura is fully committed to assisting Evolve in expediting the correct disbursement of funds held by Evolve to end users, and will make every effort to do so. As communicated earlier, the anticipated timeline based on the collection of the necessary data is approximately eight weeks, and Evolve will update that as appropriate. 

Updated: August 2, 2024

Evolve Bank & Trust (“Evolve” or “Bank”) is providing this update to document the Bank’s recent progress in performing a reconciliation that, once completed, will enable Evolve to distribute end user funds in its possession.

Why is Reconciliation Necessary?

Evolve continues to receive communications from end users and other parties who are unable to access their funds following the bankruptcy of Synapse Financial Technologies, Inc. (“Synapse”).  The vast majority of these individuals are customers of Synapse Brokerage LLC (“Synapse Brokerage”), a wholly-owned broker-dealer subsidiary of Synapse.  Many Synapse Brokerage customers feel that no one is able to give them a clear understanding of where their funds are, and why it is taking so long for them to be released.  They are understandably frustrated and worried about when they will receive distributions from Evolve or other entities in the Synapse ecosystem.

Evolve was not a program bank of Synapse Brokerage.  Evolve is holding approximately $46 million in accounts created so that the Bank could continue to perform payment processing activities for Synapse Brokerage end users following their fintech platforms’ migration from Evolve to Synapse Brokerage in Fall 2023.  In order to distribute these funds to Synapse Brokerage end users, the Bank needs to know the following two essential pieces of information:

  1. Which Synapse Brokerage end users have funds at Evolve?
  2. For those Synapse Brokerage end users with funds at Evolve, how much does the Bank owe to each end user?

Synapse communicated this information to Evolve in a final ledger on May 17, 2024.  However, the ledgers that Synapse provided to Evolve are incorrect.  In reviewing the ledgers, Evolve has observed significant differences in Synapse Brokerage end users’ balances from one day to the next, without a corresponding movement of funds.  Evolve has provided examples of these irregularities in prior filings with the Court.

Without an accurate ledger, Evolve does not have either of the two essential pieces of information it needs to distribute funds.  In order to calculate these pieces of information, it is necessary to perform a process called reconciliation.  Through this process, which will take account of Synapse Brokerage end user transactions in and out of Evolve, the Bank will be able to determine (1) which Synapse Brokerage end users have funds at Evolve, and (2) the amount of their funds at Evolve.  Evolve will then be able to distribute funds to the appropriate Synapse Brokerage end users, in the correct amount.

Evolve is Performing Reconciliation Right Now

As noted above, Synapse failed to accurately reconcile Synapse Brokerage end user transactions and accounts at Evolve.  As a result, end users and Synapse ecosystem banks find themselves in the regrettable situation of not knowing who is owed what. 

This is why Evolve has developed, and is in the process of executing, a Reconciliation Plan.  The essential components of this Plan are:

  • Collection of Synapse’s account and transaction data;
  • Thorough analysis of this data, along with Evolve’s own data, to track the flow of funds into and out of Synapse Brokerage end users’ accounts; and
  • Calculation of the funds actually owed by Evolve to end users, which will support the distribution of funds at Evolve to the appropriate end users.

Implementation of the Reconciliation Plan is underway, with staff at Evolve working around the clock to collect data, write code to analyze data, and track the movement of end user funds down to the individual transaction level. 

In addition, since our last status update, Evolve has engaged Ankura Consulting Group, a third-party firm with strong expertise in accounting and reconciliation, to assist with executing the Reconciliation Plan.  Evolve is also continuing to work with Synapse Brokerage platforms to determine whether they have their own data that should be considered in the reconciliation.  Throughout this process,  the Evolve team is providing updates to the Trustee to ensure transparency and cooperation, and will continue to provide summaries of our progress to the Court and the public as our work continues.

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The Bank appreciates the opportunity to provide this update, and will continue to apprise the Trustee, the Court, and the public of our progress on completing the Reconciliation Plan and distributing end user funds.