Curriculum·Graduate·G603
Payroll, Contractors, and Held Balances
Synapse and Evolve Bank, 2024. Synapse was a middleware company that connected consumer fintech apps to a partner bank, Evolve, so apps could offer accounts, payroll and payments without being banks themselves.
Lesson 1 opens on
Synapse and Evolve Bank, 2024
Synapse was a middleware company that connected consumer fintech apps to a partner bank, Evolve, so apps like savings and payment products could offer accounts without being banks themselves. The customers' dollars sat in pooled accounts at the bank, and the record of which individual end user owned what within those pools was a ledger, kept largely by Synapse. When Synapse failed and filed for bankruptcy in 2024, that ledger and the bank's records could not be reconciled: the sum of what end users were owed did not match the funds actually in the accounts: by June 2024 end users were owed about 265 million dollars against roughly 180 million held for them at the partner banks, a shortfall of about 85 million, and the trustee reports that about 219 million dollars held on behalf of end users had been frozen as of May 2024 while no one could establish who was owed what.
The lessons
- G603-01Who holds the balance, and can they prove itExplain that a held balance is only as safe as the ledger recording who owns itabout 33 min · opens on Synapse and Evolve Bank, 2024
- G603-02Paying a workforce: batch payments and their failure modesExplain that batch payroll concentrates the authority to pay a whole workforce in one processorabout 33 min · opens on MyPayrollHR, September 2019
- G603-03Contractors, cross-border, and the compliance that attachesExplain that calling a worker a contractor does not settle their legal classificationabout 33 min · opens on Uber and driver misclassification, 2021 and 2022
- G603-04Reconciling a payment ledger you do not controlExplain that 'segregated on the ledger' is not the same as segregated in factabout 33 min · opens on MF Global, October 2011