We Uncovered the Savings Account Scam No One Is Talking About

[00:00:00]A few months ago, I got an email about $100 million that was stolen from the bank accounts of everyday Americans. And almost all of it is still missing.

[00:00:11]I was intrigued, so I called the guy who emailed me.

[00:00:13]His name's Chad.

[00:00:14]I was adding to it over time, so I think I was doing $50 a week or every two weeks or something.

[00:00:20]He told me that in 2021, he opened a high yield savings account at a new bank.

[00:00:25]Meet Yotta.

[00:00:26]While most banks pay almost no interest on your savings, Yotta partners with banks that pay 15 to 100 times more.

[00:00:34]I was expecting the same thing as what I had already had in my credit union, except the potential for greater interest returns.

[00:00:40]But in 2024, something weird happened.

[00:00:43]On May 12th and May 14th, I tried to pull $10,000 out of there, and it wouldn't let me.

[00:00:50]Today, two full years later, he still hasn't been able to access his funds.

[00:00:55]I asked how much.

[00:00:57]$23,419.21.

[00:01:00]The most incredible part?

[00:01:02]Yotta said the money was FDIC insured.

[00:01:06]You may also have your emergency fund parked in a high yield savings account, and think that that FDIC insured stamp means it's 100% safe.

[00:01:15]But what happened to Chad shows that that might not be true.

[00:01:18]The story he told me was complicated and involved lots of names I'd never heard before.

[00:01:22]I think mostly it was Evolve, Evolve worked with Synapse, moving money between Lineage and AMG and Evolve.

[00:01:29]He said there were thousands of others in the same boat.

[00:01:31]I wanted to talk to them. So I posted on the Yotta subreddit.

[00:01:35]Within days, hundreds of people reached out and told me their stories, each unique but also kind of the same.

[00:01:42]I opened the bank account. It was literally a savings account.

[00:01:45]FDIC insured, FDIC insured, FDIC insured.

[00:01:49]I deposited over $100,000.

[00:01:52]Now it's basically gone. All my savings were gone.

[00:01:54]This money's gone. Somebody stole it.

[00:01:56]The money hasn't disappeared. The money still is somewhere.

[00:01:58]I find it really odd that a place could literally lose 100 million, take no responsibility. Yeah, it's crazy.

[00:02:05]How could millions of dollars in FDIC insured deposits just disappear from a bank?

[00:02:11]As I started investigating, I realized that this story is so much bigger than Yotta.

[00:02:16]Silicon Valley billionaires are exploiting a loophole in our financial system that puts thousands of bank accounts at risk, including mine.

[00:02:25]I started using Yotta in 2020.

[00:02:28]I want to say it was back in 2021. 2019.

[00:02:31]I was kind of on the financial improvement path. For the first time ever, as you know, mid-thirties millennials, my wife and I finally had a little bit of money that we can put into savings.

[00:02:40]So we were looking for a high yield savings account.

[00:02:43]Enter Yotta Savings. A banking app that has a weekly drawing just like the lottery, except it's free.

[00:02:49]It simply was a high yield savings account that gamified savings.

[00:02:54]for every $25 you have saved in your Yotta account, you get one new ticket every single week.

[00:02:59]Why not make savings fun? If you don't win you lose nothing.

[00:03:04]So no gambling at all.

[00:03:06]The biggest thing is like, oh it's FDIC insured, so there's literally zero risk for your money.

[00:03:11]I'm that user that will actually read the 30 page agreement, and I went through it before we joined the bank and was like, you know what?

[00:03:18]This checks out. It is FDIC insured.

[00:03:21]FDIC insurance means if your bank fails, the federal government will pay you back for whatever you had in there up to $250,000.

[00:03:29]That was the ultimate guarantee.

[00:03:31]From that point on, I didn't really need anything else to reassure me.

[00:03:34]I initially put like 10K in and then put another 10K in after a few months. I started up with an auto transfer for $25 a week.

[00:03:42]Was this earmarked for anything in particular?

[00:03:44]Yeah. You know, I was saving up for a house.

[00:03:47]It was literally my emergency fund.

[00:03:49]Our family's emergency savings. 26K. Almost 27,000.

[00:03:52]Over 30,000. 88,000.

[00:03:54]Dude, it was 100K. In May 2024, shit hit the fan.

[00:04:00]I went to buy furniture.

[00:04:01]I had to pay $3,000 down.

[00:04:03]I try to use my Yotta debit card and it declines. And I'm like, that's strange.

[00:04:07]And I try again and I go into the app and it just isn't working.

[00:04:11]Yotta emailed users saying their funds were frozen temporarily.

[00:04:15]At first I thought probably like a security.

[00:04:17]thing, they'll probably be fine in a few days or a week or so. Like it's not unheard of for like PayPal or stuff like that to have a temporary freeze.

[00:04:24]But weeks later, nothing had changed.

[00:04:26]And that's kind of when the email came in from Yotta saying "it isn't us, it's the payment processor."

[00:04:31]What do you mean, you're the bank, aren't you the payment processor? Like, I'm depositing my money into Yotta.

[00:04:38]This is when it became clear that Yotta is actually not a bank.

[00:04:42]It's a neobank. A financial technology company also known as a fintech.

[00:04:48]Basically, it's an app that does bank-y stuff, like holding your emergency fund and paying you interest on it, but – and this is important – it doesn't have a bank charter.

[00:04:58]Now, you might be wondering, hey, shouldn't we have some sort of law against that?

[00:05:03]Well, we do.

[00:05:04]Under the Glass-Steagall Act of 1933, banks can't take customer deposits unless they have a bank charter.

[00:05:11]Yet all of these apps seem to do exactly that. How?

[00:05:15]It's all thanks to Peter Thiel. Back in the 2000s, multiple states were investigating PayPal for potentially operating an illegal bank because they were letting customers keep money in their PayPal accounts.

[00:05:27]But Thiel had a workaround.

[00:05:29]See, PayPal partnered with chartered banks and they were the ones to actually hold the deposits, not PayPal.

[00:05:36]Thiel aggressively lobbied his case in Congress and ultimately the FDIC agreed.

[00:05:41]PayPal was not a bank.

[00:05:43]So Glass-Steagall didn't apply.

[00:05:46]You probably have money in a neobank that works like this without even realizing it.

[00:05:50]For instance, do you bank with Chime?

[00:05:52]Well, your money is actually in one of these two banks.

[00:05:56]Current's high yield savings accounts are stashed here or here.

[00:06:00]And Venmo puts certain types of funds in The Bancorp bank.

[00:06:04]Yotta listed just one bank partner on their websiteL Evolve Bank & Trust.

[00:06:09]I signed up for the bank thinking like this is Yotta Bank.

[00:06:12]I didn't know about Evolve.

[00:06:13]So did you see Yotta as a bank?

[00:06:17]Yes, and I was telling people at work about it.

[00:06:20]I was like, "hey, this is really good."

[00:06:23]And they're like, "is it FDIC insured?"

[00:06:26]And I said, "here's the website.

[00:06:28]It says right on the website that it's FDIC insured."

[00:06:31]But a few weeks after Yotta users were locked out of their accounts, the FDIC issued this consumer memo indicating that they were not going to step in here. To explain why we have to go back to May 2024, when the funds were first frozen.

[00:06:46]Remember how Yotta was blaming the freeze on an outage with their payment processor?

[00:06:50]It turned out there was another fintech company involved in this called Synapse Financial Technologies.

[00:06:56]I wasn't even aware of Synapse. I didn't know about Synapse.

[00:06:59]I had never heard of Synapse. But there was someone who had.

[00:07:03]He has been covering the whole Synapse collapse.

[00:07:06]Jason something.

[00:07:07]Jason Mikula.

[00:07:08]Jason Mikula. My name is Jason Mikula.

[00:07:11]I worked both in non-bank fintechs as well as working to start Goldman Sachs' retail bank, Marcus.

[00:07:17]I publish a newsletter called Fintech Business Weekly.

[00:07:21]Jason explained to me that Synapse was like a matchmaker for fintech companies and banks.

[00:07:26]The United States has a lot of banks.

[00:07:28]There are a lot of small banks that are struggling to survive.

[00:07:32]So a company like Synapse would make a pitch that's basically, "hey, we can help bring you fintech programs, which in turn are going to bring deposits."

[00:07:43]Deposits are the lifeblood of any bank.

[00:07:45]The sort of most desirable form is called sleep money. Money that's sitting in a checking account, meaning it doesn't cost the bank anything.

[00:07:54]In other words, an emergency fund.

[00:07:56]Exactly what most people used their Yotta accounts for.

[00:08:00]And how did Synapse pitch themselves to fintech companies?

[00:08:03]Well, their biggest investor, Andreessen Horowitz, called them "the Amazon Web Services of banking" because they made it possible for fintechs to launch quickly.

[00:08:13]They'd find them the bank partners they need to get around Glass-Steagall and Synapse would also take care of that pesky, technical banking stuff like, you know, transferring and keeping track of hundreds of millions of customer dollars.

[00:08:25]So Synapse would collect all the money from their partner neobanks, not just Yotta, but others like Juno and Mercury, and put it in chartered banks.

[00:08:34]This is a relatively common business model.

[00:08:37]And there are other middlemen companies similar to Synapse.

[00:08:40]But here's where it gets a little crazy.

[00:08:42]Synapse didn't create a separate bank account for each customer.

[00:08:46]They simply pooled thousands of people's savings together in large FBO accounts, or "for benefit of" accounts.

[00:08:53]So we're looking at a bank statement for one of Synapse's FBO accounts at Evolve, a seemingly endless stream of transactions, payroll, Cash App, Amazon, people paying their Planet Fitness bill for the month.

[00:09:08]Wow that's cheap, 10 bucks.

[00:09:10]So an FBO account is kind of like if there was hundreds of people sharing one bank account.

[00:09:15]Yes. Venmo, PayPal, Cash App, Robinhood, Betterment, Chime, and many more neobanks often use these giant pooled accounts to manage customer money.

[00:09:25]So even if it looks like you have $100 in your Venmo account, it could be held in the same account as thousands of other Venmo users.

[00:09:34]Only Synapse was keeping track of how much money each person had.

[00:09:38]At one point, Synapse had contracts with 100 fintech companies, resulting in about 10 million end users.

[00:09:45]But by late 2023, its biggest partnerships were deteriorating, and in April 2024, it declared bankruptcy.

[00:09:52]Soon, Synapse's software went offline, causing a freeze on all of these user accounts.

[00:09:58]And this is the reason why the FDIC did not step in. FDIC insurance only applies when a bank collapses.

[00:10:05]But Synapse wasn't a bank, and it's not FDIC insured.

[00:10:11]Yotta isn't either, for that matter.

[00:10:13]They were claiming the savings accounts were FDIC insured because the money was in Evolve Bank, who is FDIC insured.

[00:10:20]But Evolve didn't collapse, so no FDIC insurance.

[00:10:24]The FDIC is very, very good at resolving failed banks in a way that does not impact depositors.

[00:10:31]They have a playbook.

[00:10:32]There is no playbook for the failure of a third party technology service provider like Synapse.

[00:10:38]The implications of this are huge.

[00:10:40]If you use Chime, Cash App, PayPal, or Venmo, this applies to you.

[00:10:45]If any of these companies fail, FDIC insurance will not kick in to protect your funds.

[00:10:52]While I was reporting this story, I searched for my own FDIC-insured savings account on the FDIC website.

[00:10:59]It wasn't on there. And I realized that my savings are also in a fintech company structured kind of like Yotta.

[00:11:05]Now, I do trust this company and the partner bank, but how would I know if there's a Synapse- like middleman somewhere in there?

[00:11:13]And even if I did, how would I vet them?

[00:11:16]It's essentially impossible for an average consumer to verify that something like this wouldn't necessarily happen to them.

[00:11:24]Try to call up Chime or try to call up Bancorp and say, "hey, are you meeting all the criteria for this kind of insurance to apply?"

[00:11:32]There's no way for you to really verify that.

[00:11:35]But wait, it gets worse.

[00:11:37]Jason showed me an email between Evolve and Synapse employees leaked to him by an anonymous source in October 2023.

[00:11:44]The real jaw dropping moment was this line here. Evolve's employee emails his counterpart at Synapse and says "the balances tend to differ a couple hundred million on the daily.

[00:11:55]I'm comparing the Synapse data to FBO for consumer and business users.

[00:11:59]Are there other Evolve accounts I should take into consideration?"

[00:12:02]And this is in November 2022, years before the collapse and users funds are frozen. And they're saying we can't reconcile, quote, a couple hundred million on the daily end quote.

[00:12:15]You heard that right.

[00:12:16]Synapse lumped everyone's money together into big bank accounts and then lost track of a bunch of it.

[00:12:22]To complicate things even more, Synapse had started moving some users' money to other partner banks, AMG, American Bank, and Lineage.

[00:12:31]Then, when they went bankrupt, their documents revealed that almost $100 million was actually just missing.

[00:12:38]Do you know which bank your money was with? Evolve.

[00:12:42]It was on all my statements. Through the Yotta app, there was an account that appeared to show a bank account with Evolve Bank and Trust. The account number and routing number were Evolve's. Where do you think the money is?

[00:12:54]Evolve.

[00:12:57]Evolve Bank & Trust.

[00:12:59]Evolve Bank only has eight branches here in the Memphis area, but this tiny regional bank was the power grid for more than a thousand fintech companies across the country.

[00:13:09]Big names like Stripe, Shopify, and Mercury have all worked with Evolve, but many of their partners are super sketchy.

[00:13:17]Like now-bankrupt crypto firms BlockFi and FTX.

[00:13:20]You know, the one where Sam Bankman-Fried embezzled billions of dollars of customer funds?

[00:13:25]Evolve has been investigated by the FBI for these fintech partnerships, by the DOJ for lending discrimination, and by the Federal Reserve for not having a strong enough anti-money laundering program.

[00:13:36]And in the past few years, 32 Republican campaigns have suddenly started banking at this small Memphis bank, including former Member of Congress George Santos and Representative Andy Ogles.

[00:13:48]So it shouldn't be shocking to learn that when Yotta users showed Evolve their bank statements proving how much money they had in their accounts, Evolve refused to pay them back. We initiated our own investigation.

[00:14:00]They launched this website and in November said they would pay back whatever user funds they had.

[00:14:06]I saved over $21,000 over the course of two and a half years, and they offered me $17 back.

[00:14:16]$20. $0.75. About $1.75 as a full reconciliation of my account. Evolve has said they used federal banking and debit card processing data to calculate how much of each person's money they had.

[00:14:26]And why don't their numbers match up with user statements?

[00:14:30]They blamed that on Synapse.

[00:14:31]There's just like radio silence from Yotta.

[00:14:34]Evolve is like we're not responsible, it's Synapse. And Synapse is like, we're not responsible.

[00:14:39]we're not a company anymore.

[00:14:41]Like no one is responsible for my money.

[00:14:43]It's that Spiderman meme, right?

[00:14:44]It's the three Spidermans all pointing at each other.

[00:14:47]You lost the ledgers, no, you lost the ledgers.

[00:14:49]And nobody's gotten in trouble.

[00:14:50]It's clearly somebody's fault. Who did this? Who stole my money?

[00:14:54]I think it's really hard to single out a particular villain.

[00:14:59]It's the system that failed.

[00:15:01]Hilary Allen is a financial regulation expert.

[00:15:04]She told me that there are three main federal agencies that regulate banks, but none of them have authority over fintechs.

[00:15:11]Instead, neobanks have to register with each state as a money business.

[00:15:16]When you have a patchwork of regulatory regimes like that, it's pretty easy for things to fall through the cracks.

[00:15:22]The Consumer Financial Protection Bureau is the only federal agency that has tried to rein in fintechs, but now the Trump Administration is dismantling it thanks to tech billionaires like Marc Andreessen, whose VC firm has invested in nearly 100 fintech companies.

[00:15:38]And okay, yes, big banks suck and they probably do need some healthy competition.

[00:15:43]But do we trust Silicon Valley to lead that charge?

[00:15:46]Where you have people's payments data, that's incredibly valuable.

[00:15:51]The fintech industry is essentially through these partnerships, trying to free ride on those benefits without having to pay for the compliance costs.

[00:15:59]And by the way, there's a reason that we have those regulations.

[00:16:03]Up until the 1930s, when a bank collapsed, everyone just lost their money.

[00:16:07]Deposit insurance was introduced by popular demand.

[00:16:10]People said, this is ridiculous.

[00:16:12]There should be something to protect our money where the banks go under.

[00:16:16]And it's not surprising to hear the customers of Yotta echoing the same thing.

[00:16:20]The other reason Yotta and Synapse didn't face enough scrutiny from regulators is even more depressing.

[00:16:26]Take the case of Silicon Valley Bank. Increasing fallout following the historic collapse of Silicon Valley Bank. $1.8 billion.

[00:16:35]It was the bank that funded the tech community.

[00:16:38]SVB depositors did get bailed out. The government said, "We're just going to cover everyone's deposits even above 250K."

[00:16:45]The very perverse lesson about Synapse was it wasn't big enough.

[00:16:51]It's everyday people who missed a mortgage payment, got their car repossessed.

[00:16:56]My mom got sick with cancer and all of these costs compounded.

[00:16:59]We're right back into breaking out the credit card for life expenses.

[00:17:03]I started incurring credit card. Credit card debt. On top of a mortgage.

[00:17:09]I've just given up hope on buying a house.

[00:17:10]I had to empty out my retirement accounts from the military.

[00:17:14]My roof has got a leak in it.

[00:17:15]I'd love to have the money to help cover that cost.

[00:17:18]You know what I mean? It's, it's difficult. So.

[00:17:23]It really is the classic Silicon Valley story.

[00:17:27]Making individuals shoulder responsibility for things that they are profiting from. This move fast and break things.

[00:17:34]This disregard for regulatory compliance.

[00:17:37]The claim is that they are doing tech innovation, but really their tech often is lackluster or isn't the draw.

[00:17:45]The draw is not complying with the law.

[00:17:48]The CFPB eventually did file a complaint against Synapse over a year after it declared bankruptcy.

[00:17:55]That doesn't penalize anyone at Synapse.

[00:17:57]It just lets the CFPB tap into a civil penalties fund to pay back victims.

[00:18:02]That could take another couple years, and the fund won't cover all the money that's still missing.

[00:18:07]It's a reverse bank robbery.

[00:18:09]The bank robbed the users as opposed to the users robbing the bank.

[00:18:12]How can we prevent something like this from happening again?

[00:18:16]The answer is actually pretty simple.

[00:18:18]Ban fintech-bank partnerships.

[00:18:20]We already have the law.

[00:18:22]We just need lawmakers to enforce it.

[00:18:24]If you want to be a bank, you should be a bank, and it should come with all the benefits and the costs that come from having a bank charter.

[00:18:32]So where are they now?

[00:18:34]I just checked the app store and Yotta is still on there.

[00:18:37]Looks like it's turned into a full on gambling app.

[00:18:40]Its founder, Adam Moelis, didn't face any consequences.

[00:18:43]His dad's a billionaire with ties to the Trump Administration.

[00:18:47]Synapse's CEO was featured in Time a few months ago for his new company, creating AI powered robot soldiers.

[00:18:55]I think the future of warfare is real life video games.

[00:18:59]He's already gotten millions of dollars in funding, including from Eric Trump.

[00:19:03]And as for Evolve, earlier this year, it announced a partnership with Mr. Beast, for his banking app for kids. Evolve's former CEO was recently arrested for child porn.

[00:19:15]Where do you put your savings nowadays?

[00:19:18]In one of those big banks. In a local bank.

[00:19:20]Brick and mortar.

[00:19:21]It's right down the street.

[00:19:23]I can go in there if I got any problems.

[00:19:24]I wish I could just stuff it all in a mattress, because my trust for any financial institution is at an all time low.

[00:19:32]Even now, even talking about it kind of makes me like a bit emotional because it's, you know, I was like, I, have always kind of like prided myself as someone that is like relatively responsible with my money.

[00:19:46]We're told that it's on us individually to protect ourselves from companies with huge amounts of lobbying and huge amounts of lawyering.

[00:19:56]I'm a law professor who studies financial regulation for a living, and it's hard for me to parse the fine print sometimes. To say that individuals bear the burden of protecting themselves from those business models is a really messed up way, frankly, of dealing with things.