The New York Times shared two cautionary tales the last two days. Yesterday, subscribers read about a missing "up to $96 million" from a fintech company that represented itself as an insured bank to customers. Synapse, backed by Andreessen Horowitz, exists outside of any regulatory authority leaving customers without access to their funds and no legal recourse. Did Synapse declare bankruptcy in an effort to avoid responsibility for the missing money? A forensic accounting and software analysis is in order. That should be completed before the company is wound up in bankruptcy court.
Andreessen Horowitz announced the establishment of an office in Washington, D.C.
Today, NYT reported on The Carlyle Group's Humpty Dumpty like cracking of BeautyCounter. Carlyle turned a multilevel sales force of 60,000 into 35,000 by changing (cutting) the pay structure. New technology turned out to be unreliable. Ordinary BeautyCounter people endured extraordinarily difficult things from private equity underwriter (PEU) ownership.
Carlyle founded in 1987 in Washington, D.C., the new home of Andreessen Horowitz. Why D.C.? Because politicians Red and Blue love PEU and increasingly, more are one.
Update 7-11-24: Semafor held its Future of Fintech meeting and Synapse was a hot topic:
When Synapse filed for bankruptcy in April, it shut off a critical system, freezing hundreds of millions of dollars in deposits.
The bank behind Synapse stated:
Synapse’s abrupt shutdown of essential systems without notice and failure to provide necessary records needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law.
Any insinuation suggesting that Evolve has intentionally mishandled or withheld funds is entirely false and defamatory.Yet customers have been cut off from their funds for weeks. It's clear Evolve did not have contingency plans for Synapse customers no longer able to use the forward facing interface.
Evolve got ransom wared shortly after Synapse failed. They state:
we have backups available and experienced limited data loss and impact on our operations.I hope they have a backup available from close to the time Synapse imploded.
Marc Andreessen and his Silicon Valley ilk like to break things. That they did with Synapse's failure. And the people in Washington weren't there to protect customers, i.e. the little people.
Those who broke it should fix it.
....discrepancies in Synapse’s records and a potential shortfall of $65 million to $96 million
Fintech's future should involve jail for bad actors. Beware the middlemen wanting fees.
Update 8-3-24: Wall Street on Parade wrote:
The most recent embarrassment for U.S. banking regulators was the bankruptcy filing by Synapse Financial Technologies, a fintech startup that had financial backing from Andreessen Horowitz, the giant Menlo Park, California venture capital firm that has morphed into a major funder of the Super PAC, Fairshake, that is attempting to pack the U.S. Senate with crypto sycophants come the election in November.
Nothing to worry about here.
“While the numbers vary, fintech companies have been valued today at more than $1 trillion. There is another $2.5 trillion in cryptocurrencies represented by 10,000 different coins, as well as about $1.3 trillion in synthetic and derivative crypto securities being sold by Wall Street.And they want access to your retirement account.
