Today, we begin returning funds that Evolve holds to Synapse Brokerage end users. We have built a comprehensive information center for users at reconciliationbyevolve.com. While the information center sheds more light on our actions related to end users, we want to directly address some of the questions our partners may have.
First, let us be clear: Despite claims from others, there is no shortfall at Evolve. Evolve has sufficient funds to distribute monies it holds to Synapse Brokerage end users. Likewise, it is important you know that despite the attention the Synapse situation has generated, we remain well-capitalized and in a strong position to serve all of our customers, including our valued Open Banking customers. We are deeply grateful for your continued partnership.
We understand much has been said—and speculated about—in public regarding this situation. Rather than addressing every claim and public statement, we have spent our time focusing on reconciling the materially inaccurate Synapse ledgers so that we could return funds Evolve held to Synapse Brokerage end users.
A key part of our process was to engage Ankura, a firm with decades of expertise and experience reconciling huge amounts of transaction data. Ankura first reconstructed Synapse Brokerage end users’ true ecosystem balance using Synapse’s own transaction data, Federal Reserve data, and debit card and ACH processing transaction data that Evolve held, and then determined how much of those balances were actually at Evolve. This analysis proved Synapse’s ledgers were false.
Ankura identified multiple instances where Synapse’s transaction records—which purported to show millions of dollars of end user funds moving to Evolve from other institutions—were contradicted by Federal Reserve records and Evolve’s own transaction data. For example, Synapse’s ledgers and transaction records purport to show substantial movements of funds on February 21, April 30, and May 15, 2024. But Federal Reserve and Evolve transaction records from those days—and the days around them—show that those huge movements did not actually take place.
Once those and other contradicted transactions were excluded, it became clear that Evolve did not hold the amount of end user money that some interested parties have alleged. It was also clear to us that paying out end users based on incorrect ledgers would have been wrong, irresponsible, and unfair. Instead, using Ankura’s reconciliation, they helped determine the amount of end users’ funds held at Evolve. And based on that work we are beginning to return end user funds.
Of course, Evolve is just one piece of the puzzle. From the beginning, it has been a challenge to determine where end user funds are located because Synapse spread end user funds across numerous banks that partnered with or provided services to Synapse Brokerage. And because of Synapse’s incorrect ledgers, it is almost impossible to assess where each end user’s funds are held.
Without a comprehensive, ecosystem-wide review of transaction data, we cannot speak to what other banks may hold for each end user. But we hope those banks will work with us to compile a more complete picture of which banks held funds for which end users. We have asked the other banks previously to share comprehensive transaction data. While they have not yet done so, we remain hopeful that they will and that we will be able to finally determine just where each end users’ funds are.
We want to make sure the facts are clear for anyone involved in the Synapse Bankruptcy. We did not rely on the inaccurate Synapse ledger. Nor did we unilaterally determine the amounts that Evolve owed to Synapse Brokerage end users. Instead, we did the difficult, time-consuming, and expensive—but right—thing to do by relying on the analysis of a reliable third party. As a result, we are confident in the outcome of Evolve’s reconciliation, and glad to be proceeding with the return of funds to the correct recipients.
Please do reach out if you have any questions.
Sincerely,
Scot Lenoir
Founder
Evolve Bank & Trust
