In 2022, after her family had a series of health scares, Kayla Morris sold her house. She cleared $280,000, representing 15 years of her life savings. She decided to put it all into an account on a money-saving app called Yotta, which operates like a normal savings program, except instead of offering a small dividend, it pays out daily sweepstakes-style rewards. Yotta promised its users their deposits were safe, just as if the money were in an FDIC-insured bank account.

That proved to be disastrously wrong. After Yotta users’ funds were frozen in May following the bankruptcy of one of its partners in fintech infrastructure, Morris waited months to find out whether she would ever regain access to her nest egg, spending hours trying to track down her money. In early November, she got an answer: She would receive just $500.

“We’re not gamblers,” Morris told the judge in a mid-November bankruptcy court hearing for Synapse, the financial services middleman that connected Yotta with banks, according to the transcript. “I never would have put a penny in if we had known that there was any risk involved.”

Today, Morris is among a handful of Yotta customers who have sued to recover their money, including in a class-action lawsuit that could represent tens of thousands of users. Through her lawyer, she confirmed she has received no additional disbursements since.

Morris and users from several other fintech apps, including the crypto platform Juno and the teen banking app Copper, are still pleading for the answer to a question they could never have imagined asking: Where is my money?

The November hearing on Synapse was a parade of financial horror stories: There was a woman who lost $22,000 that she had planned to spend on her dog’s chemotherapy and a house payment. An immigrant who had saved up for his daughter to go to college, who now has to borrow tuition money from a friend.

One man who works in payments processing was shocked to see $21,000 of his money frozen. “I know a fair amount about how this stuff works,” he told the judge. “I just don’t quite see how someone can basically say … ‘We don’t know where it went.’”

The judge overseeing the case, Martin Barash, expressed exasperation: “I don’t know whose fault that is, but it’s clear there’s a problem,” he said at the November hearing. At another, he called the whole thing “an awful, awful situation from the very beginning.”

I never would have put a penny in if we had known that there was any risk involved.
Kayla Morris, Yotta customer

Yotta and a host of other buzzy, consumer-friendly, heavily marketed platforms became embroiled in the bankruptcy of Synapse, a company almost none of the apps’ customers had ever heard of. As much as $95 million in customer funds (according to an estimate from the court-appointed trustee) went missing, and roughly $200 million in assets from customers were frozen. It has become one of the most labyrinthine cautionary tales in modern tech.

At the center of the disaster: Synapse, a company founded in 2014 that connected tech platforms like Yotta with banks and had dozens of relationships across the fintech system. When Synapse failed last April after its relationships with a regional bank and a unicorn fintech exploded, its bankruptcy brought a swath of infrastructure down with it, trapping regular people like Morris in its rubble and sending its clients, including Yotta, into free fall. “We will not stop fighting until every penny is returned,” Adam Moelis, the cofounder and CEO of Yotta, told Fortune. Juno and Copper did not respond to requests for comment.

Fortune spoke to more than a dozen former employees and Synapse partners about the meltdown. Almost a year after the collapse, nobody seems to agree on where all that customer money is, and each entity involved blames the other for shoddy recordkeeping. A Department of Justice criminal investigation is underway, and the saga is still playing out, with no end in sight.

Some 80% of Americans interface with fintech apps and services like Yotta today in some form, whether it’s Venmo or PayPal or an app teaching kids financial literacy. And the industry, which U.S. regulators are still trying to catch up with, is on the cusp of a massive sea change. President Donald Trump has promised a whopping regulatory pullback and has staffed his team with investors from firms such as Andreessen Horowitz, who have backed the disruptive fintech sector and bemoaned onerous government oversight.

Companies like Synapse and other fintech startups already face less regulatory scrutiny than traditional banks. And in this era of shrinking regulation, Synapse could be a canary in the coal mine for the dangers of the wobbly network underpinning fintech apps and their banking partners.

The cofounder

The story of Synapse starts with its cofounder: Sankaet Pathak, who is now 34 years old. In his twenties, he fit the profile of the classic Silicon Valley wunderkind, creating Synapse as a college student in 2014 and raising millions from venture capitalists, who bought into his plan to reinvent banking for the mobile-first digital age. In the company’s early days, Synapse had all the hallmarks of a startup success story—Pathak’s charismatic leadership, a rapidly expanding team, and “it” status in San Francisco.

As the fintech sector boomed over the past decade, so did Synapse and its brethren in the “banking as a service” sector, which helped consumer-facing financial platforms and apps like Yotta work with federally insured banks that could hold users’ funds. But amid its meteoric growth, Synapse began to fight with its key partner, an Arkansas-based regional bank called Evolve. Both in bankruptcy court documents and in an interview with Fortune, Pathak alleges that Evolve undercut Synapse by poaching its largest customer, the fintech unicorn Mercury, leading to Synapse’s bankruptcy.

Months later, some of the country’s top lawyers and financial experts are still trying to provide answers to the question of what went wrong—how as much as $95 million managed by Synapse disappeared, and who’s to blame. After Pathak’s high-flying startup plunged into an ugly bankruptcy, allegations of mismanagement and fraud persisted, according to court filings from the bankruptcy and associated lawsuits.

There’s no shame in failing, unless it’s catastrophic. Those were my values when I started Synapse, instinctively, and those are my values now.
Sankaet Pathak, Synapse cofounder and former CEO

Even so, Pathak seems to have emerged with his reputation largely unscathed by the still-unfolding disaster: He raised $11 million for a new robotics startup in August.

In a wide-ranging interview with Fortune, Pathak maintained that most of the blame lay with Evolve. Meanwhile, an Evolve spokesperson denied much of Pathak’s account, and argued that it was Synapse that had failed to carry out its most basic responsibilities.

Despite the calamitous impact on customers and employees who lost their jobs, when asked whether he regrets how he ran the company, Pathak insisted that he would not have altered his approach. “There’s no shame in failing, unless it’s catastrophic,” Pathak mused at one point in an interview with Fortune. “Those were my values when I started Synapse, instinctively, and those are my values now.”

Explosive growth—and warning signs

In early 2010s Silicon Valley, Synapse lacked the flair of consumer-facing startups such as Instagram and Uber. Still, it filled a need in the backend of the exploding financial technology sector, and grew rapidly alongside its unicorn clients such as Dave and Mercury. Many of these fintech apps offer traditional banking services such as savings accounts, but don’t have bank charters of their own. Instead, they partner with banks, which hold customers’ money on their behalf. Synapse became the bridge, competing with similar startups in the banking as a service sector, including Synctera and Unit.

Pathak and his Synapse cofounder, another University of Memphis alum named Bryan Keltner, raised $50 million in venture funding, including a $33 million Series B led by the influential VC firm Andreessen Horowitz in 2019. There is some debate about Synapse’s valuation at its height, with Pathak claiming it was worth over $2 billion, without offering evidence for that number beyond a projected valuation from Citi. It’s likely, however, that it was solidly in “unicorn” territory, valued at $1 billion or more.

Synapse operated in a frontier space that remains largely unregulated. Traditional banks are supervised by bodies such as the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, all of which create a jungle of red tape and compliance controls designed to protect customers’ money. But fintech apps are a different animal—they’re VC-backed startups run by “move fast and break things” founders eager to demonstrate unencumbered hockey-stick growth.

Several of the banks Synapse used to hold money from the fintechs were regional outfits that were willing to take on risky deposits in volatile sectors such as crypto. The fintechs, in exchange, could advertise that they benefited from FDIC protection—a claim that elided the reality that the customers’ funds had to travel across an invisible bridge of intermediaries like Synapse before getting to those federally insured banks.

Yotta, for example, offered the excitement of Powerball-style lotteries as an incentive, while promising the security of a traditional savings account. Yotta was among dozens of fintechs affiliated with Synapse, including the teen banking startup Copper, the crypto fintech Juno, the tech banking giant Mercury, the neobank Dave, and the financial management tool Relay.

Many of Synapse’s clients suffered from its collapse, with one—the crowdfunding firm Mainvest—ceasing operations just two months later and citing Synapse’s bankruptcy. Its CEO did not respond to a request for comment. Yotta, while still in business, took a massive reputational hit that its lawyer has claimed is “beyond repair.”

“Silicon Valley, like you imagine from the movies”

The early days of Synapse were a classic startup scene, with the first couple dozen employees hunkering down in a palatial house in San Francisco’s Twin Peaks neighborhood. It was “Silicon Valley, like you imagine from the movies,” one early employee told Fortune.

In retrospect, employees tell Fortune, there was a disconnect between the company’s college-dorm-like culture and the intricate financial work the rapidly expanding company was doing. Synapse was offering a highly technical service of processing transactions, growing to a volume of $76 billion across 18 million end users by 2022, according to Forbes. (Pathak said he could not confirm those numbers, because he did not have the records.) Such financial services require robust accounting and organization—a practice that employees say was sorely missing from the startup. These concerns would come out in bankruptcy court after Synapse’s collapse.

If you keep thinking you can just talk your way out of everything long enough, eventually people are just going to walk away.
A former Synapse employee

Half a dozen former Synapse staffers, who spoke with Fortune on the condition of anonymity because of the company’s ongoing bankruptcy proceedings, described slipshod accounting, and some portrayed Pathak as a controlling leader who wouldn’t listen to criticism. One early employee told Fortune that they personally had good experiences with Pathak but had been concerned about his engineering hiring practices—including Pathak’s propensity to hire very junior engineers with limited senior oversight, leading to technical problems and concerns about recordkeeping. Pathak declined to comment on this assertion.

All this led to “crippling levels of tech failure,” according to one former employee. And several say Pathak didn’t heed their warnings about Synapse’s crucial relationship with Mercury, the Andreessen Horowitz–backed banking startup that grew to represent around 60% of Synapse’s revenue at its peak. (Pathak declined to comment on the employee criticism.) Ultimately, Mercury abandoning Synapse to work directly with Evolve helped set off the chain of events that led to the startup’s bankruptcy.

According to the employee, staffers would frequently alert Pathak to Mercury’s complaints, such as how Synapse handled payment disputes. Pathak would brush them off and say he’d pave over any issues with Mercury’s CEO, Immad Akhund. This high-level diplomacy between the two CEOs apparently worked—until it didn’t. “If you keep thinking you can just talk your way out of everything long enough, eventually people are just going to walk away,” the employee told Fortune.

In 2020, Forbes published an investigation highlighting anonymous employee reviews from the online career community Glassdoor describing Pathak as verbally “abusive,” and a discrimination lawsuit filed by three former staffers. The lawsuit alleged gender and age discrimination and claimed that Pathak refused to pay his former head of sales while she was out on maternity leave. Former employees called Synapse a toxic work environment and described high turnover.

In his interview with Fortune, Pathak brushed off the allegations in the lawsuit and the online reviews as “cancel culture” run amok. After some initial self-criticism following the company’s collapse, he said, “I’ve come full circle that how I was running Synapse was the right way,” he said. “I should have been that hands-on all throughout … I don’t think there’s anything wrong with pushing your team to work really hard.”

Pathak has a soft way of speaking—deliberate, with a slight lilt of an accent from his childhood in Rajasthan, India. “At this point, I don’t really care what people think about me as much,” Pathak told Fortune. “I will speak what I think is true, and if people don’t like me for it, that’s fine. If people like me for it, that’s fine.”

The Evolve rupture

Earlier in Synapse’s journey, the picture looked far rosier. Pathak struck up a partnership with Evolve, the Arkansas-based bank, bonding with its chairman, Scot Lenoir, who attended the University of Memphis three decades before Pathak. They started working together in 2017 when Synapse’s deposits rose into the millions of dollars and Synapse was searching for more banking partners.

But a few years into the relationship, Pathak said that he began to hear rumors that Evolve was trying to poach Synapse’s customers, proposing that they remove Synapse and avoid its middleman fees. “It became quite clear to me that their eventual goal was to try to undercut us,” Pathak told Fortune.

An Evolve spokesperson told Fortune that there was no subterfuge involved and that the bank had a long-standing plan to move to direct relationships with fintechs and “away from aggregators like Synapse,” and informed the startup of its plans to “exit” the relationship a year in advance.

Meanwhile, as Synapse kept growing, it sought a way to cut out banking partners like Evolve. In November 2022, Pathak said, the startup had lined up a Series C round of financing in the range of $100 million and was pursuing a bank charter of its own, which would mean it could start offering deposit accounts directly to customers, eliminating the need for any banking partners. In court filings, Pathak said that Series C funding round was “vetoed by certain investor directors.” Synapse’s backers Andreessen Horowitz, Trinity Ventures, and Core Innovation Capital declined to comment or didn’t respond to requests for comment.

Then, in 2023, disaster struck. While the details are still disputed, Evolve’s contract with Synapse was set to expire in that year, and Evolve began to request a wind-down plan for some of its banking services. (Evolve insists that it informed Synapse of its plans to end the relationship in 2022.)

The conflict erupted when Synapse informed Evolve in September 2023 of an ongoing investigation where it had found discrepancies in accounts holding customer funds at Evolve amounting to around $13 million. Synapse alleged that Evolve was paying itself fees, including some it was not entitled to, from customer funds. The Evolve spokesperson said that any accounting errors were Synapse’s responsibility. “The bank provided Synapse with detailed information about every fee charged that, as program manager, Synapse was supposed to allocate appropriately to platforms and end users,” the bank spokesperson told Fortune. In response, Evolve notified Synapse on Sept. 25, 2023, that it was in breach of contract and withheld monthly payments that totaled over $40 million, according to court filings.

Two days later, Pathak laid out his claims against Evolve in a seven-page letter to the bank, viewed by Fortune, accusing Evolve of “persistent negligence” by a “misappropriation of consumer funds” and demanding that Evolve conduct its own independent investigation. The letter also acknowledges that Synapse itself may have “incorrectly received” $3.25 million from customer accounts, which it discovered from its own internal audit. Pathak wrote that Synapse was committed to paying a little more than half the amount, and Evolve agreed in an October contract, viewed by Fortune, to cover the rest.

Meanwhile, Evolve’s decision to stop providing banking services to Synapse’s clients left the middleman scrambling to find a new place to direct customer deposits. “It became an emergency rush to find new banking partners,” recalled one employee. “It was the most haphazardly put-together thing I’ve ever seen.”

This is about sloppy business practices that went on for years.
Rodney Robinson, TabaPay cofounder and president

On the same day that Evolve terminated the relationship that September, Synapse learned that Mercury—which then represented around 35% of Synapse’s business, according to Pathak—would be moving more than $3 billion of deposits out of Synapse to work directly with Evolve. The result was a perfect storm for Synapse, which lost its most important banking partner and its top customer, while it faced a mounting clash with Evolve over the accounting mismatch.

“After our experience working with Synapse, we became acutely aware that having direct relationships and integrations with our partner banks was in the best interest of Mercury and our customers long term,” a Mercury spokesperson told Fortune.

With Synapse’s revenue cut by more than a third, Pathak laid off more than 100 employees, 40% of the company’s staff, just a couple of days later. The writing was on the wall for Synapse, which would go into bankruptcy in less than a year. But that was the least of its troubles.

The shortfall

When Synapse filed for bankruptcy in April 2024, there was hope that calamity for customers could be avoided. The failing startup had been negotiating a deal with the financial software company TabaPay to acquire Synapse, an arrangement that would have filled the shortfall and solved the brewing problems.

But as it turned out, the mounting dispute between Evolve and Synapse over customer funds was just the tip of the iceberg. As Synapse’s bankruptcy began to unravel, it became clear that the discrepancies between customer balances and money held in bank accounts were not contained to Evolve, but affected Synapse’s other banking partners as well. As a result, there was a growing shortfall between the amount owed to customers and the amount held by the banks. While the actual figure is still in question, the bankruptcy trustee places it somewhere between $65 million and $95 million.

In an interview with Fortune, TabaPay cofounder and president Rodney Robinson said that all parties involved, including Evolve and his own company, had been willing to cover the gap of unaccounted customer funds, until the true extent of the shortfall became clear, and TabaPay backed out. “This is about sloppy business practices that went on for years,” Robinson told Fortune.

By May, the bankruptcy court had removed Synapse’s management from any decision-making, citing “gross” mismanagement. The judge, Barash, appointed a trustee, former FDIC chair Jelena McWilliams, who took over the day-to-day operations. More than $200 million in customer funds were frozen that month. (McWilliams did not respond to multiple requests for comment.)

Barash declared the quagmire to be a “hot mess” at an early bankruptcy hearing. Each month, the court convenes, with lawyers from various banks and fintechs, along with McWilliams, taking turns to offer incremental updates, with frustrated customers asking variations of the same question, without much luck: “Where is my money?”

At a December 2024 bankruptcy hearing, McWilliams compared the morass to her father losing his savings in her home country of Yugoslavia after the Soviet Union collapsed. She expressed frustration at her own inability to make the end users whole. “It’s incredibly disheartening,” she said, audibly fighting back tears. “I’m at my wit’s end as to how best to help them.”

The $95 million question

So where is all that missing money? No one seems to know, but everyone blames someone else. For customers, the frustrating reality is that the deposits—while enormous to them—represent a tiny fraction of the billions in transaction volume that Synapse was handling, raising the alarming possibility that their funds simply slipped through the cracks.

Given the litigation embroiling nearly every party in the case, from the banks to Yotta to Synapse, most of the entities involved are predictably tight-lipped. Pathak is the notable exception.

Pathak has lobbed vitriolic accusations at Evolve while downplaying his own culpability. The former Synapse CEO has posted screeds against the bank on X and LinkedIn, and even called in to a recent bankruptcy hearing to offer his commentary, imploring Evolve to make the findings of its reconciliation public.

Pathak insists that the shortfall is rooted in the discrepancies between Synapse’s records and Evolve’s, as well as the fees that Evolve was debiting from customer accounts. A month after Synapse’s bankruptcy (and several months after a Mercury lawsuit claiming that Synapse had withheld $30 million in revenue), Pathak alleged in a court filing that Evolve had moved over nearly $50 million more than it should have when migrating off Synapse to Evolve. Synapse also countersued Mercury for more than $36 million.

Mercury strenuously denies that it had improperly moved any funds: “Despite the lack of evidence provided by the former Synapse CEO, Mercury investigated the claim fully and found no evidence to support it,” a Mercury spokesperson told Fortune. “Mercury did not over-migrate any funds during the transition, and we have consistently maintained that position.”

An Evolve spokesperson told Fortune that Pathak’s version of events is “simply not true.” Instead, Evolve argues that Synapse employees had full visibility into the startup’s accounts at Evolve and that Evolve provided up-to-date accounting information. “Despite our strong efforts, we were never able to get [Synapse] to implement reconciliation processes with sufficient discipline,” said the spokesperson.

Evolve also directed blame at Pathak himself. “Sankaet Pathak and Synapse failed at their most critical responsibility: to keep accurate ledgers to track where individual end user funds were held,” the spokesperson told Fortune. “Synapse was the only member of the ecosystem that was in a position to do this.”

But Pathak is not alone in his view that Evolve bears most of the blame for the disaster. Yotta, whose customers initially lost access to over $100 million in funds, filed a lawsuit against Evolve in September, alleging “grotesque misconduct” by the bank, which Yotta’s lawyers described as having a “rotten core.” Yotta is accusing Evolve of fraud and negligence, among other crimes. When asked for comment, the Evolve spokesperson shared its motion to dismiss the lawsuit, which argues the bank was entitled to the fees it took.

The rubble

Evolve started distributing funds to customers on Nov. 4, but many customers are far from being made whole. At the bankruptcy hearing on Nov. 13, the bank wouldn’t share how much it had passed on to users, citing the ongoing litigation. (The spokesperson would not provide a figure when asked by Fortune.) Indeed, each entity that spoke to Fortune had a different estimate for how large the shortfall is, reflecting a situation that still appears to have no end in sight.

Gerard Stranch, Kayla Morris’s attorney, is still trying to recover the $280,000 she lost, and is representing five others whose money is frozen. “The problem is that for a lot of people, it’s ‘I need my money now. This was my emergency fund. This was my savings,’” he said. “I think ultimately the money will be found, and people will get some back. Whether they’ll be made completely whole or not, I don’t know, and I don’t know how long it will take.”

On Nov. 27, Evolve released an open letter to customers embroiled in the Synapse bankruptcy, announcing that it would work with other partner banks to do a full reconciliation to find out what happened to user funds. The bank also provided further evidence that it had moved most of the disputed money out of its accounts and into other banks after ending its relationship with Synapse. “We are pursuing all possible avenues to obtain this critical data from the Synapse Brokerage ecosystem banks,” the Evolve spokesperson told Fortune.

One of the core disputes between all the parties in the bankruptcy is that no one wants to pay for that full reconciliation to find the missing money—a process that, during a January bankruptcy hearing, McWilliams estimated would itself cost several million dollars. One exasperated Yotta customer asked if the startup’s founder—Adam Moelis, the son of billionaire Ken Moelis—would cough up the funds. Moelis’s lawyer stepped in to say his client would not answer the question.

In an interview with Fortune, however, Moelis said that Yotta would be willing to try to lead a group of affected Synapse partners to pay for a reconciliation, though his company would not pay the full amount. Moelis added that Yotta’s willingness to partially fund the reconciliation does not change Yotta’s allegations in its lawsuit against Evolve. The issue, Moelis said, is that it would need data from all the banks, including Evolve. In a letter sent to Yotta at the end of February, viewed by Fortune, Evolve’s lawyer criticized Yotta’s decision to sue the bank and said it was conducting its own reconciliation.

The Evolve spokesperson told Fortune that it is working to secure data from the other partner banks to create an ecosystem-wide analysis, while not directly answering whether it would work with Yotta on a reconciliation effort. On Tuesday, Evolve announced it would pay for a full reconciliation if the other banks shared their data.

Evolve’s implosion with Synapse has brought public scrutiny, and the bank has suffered consequences with its client base. The Information reported last March that Mercury and Evolve’s relationship was fraying, with Mercury looking for other banking partners. One Mercury customer, an enterprise business who spoke with Fortune on the condition of anonymity to discuss private business communications, said that Mercury is helping customers migrate off Evolve. On Monday, the fintech unicorn Dave announced it was dropping Evolve as a partner.

The spokesperson for Mercury declined to comment. “Evolve remains focused on strengthening our existing relationships and exploring new opportunities with established fintechs,” said the spokesperson from Evolve.

Other banks have also been swallowed by the chaos. The Tennessee-based bank Lineage, a different Synapse partner, suffered a shareholder revolt, partly over its relationship with the startup, ousting its senior management amid concerns about its financial stability. A representative from Lineage did not respond to a request for comment.

Biden’s approach to regulation was to “keep fintechs out.” Trump is expected to be much more receptive.

Synapse’s former fintech clients have also suffered. In its lawsuit against Evolve, Yotta claimed that its business had been decimated. “Yotta’s reputation in the market, once sterling, has been tarnished, potentially beyond repair,” the company’s lawyers wrote.

Meanwhile, regulators have tried to head off any repeats of this morass. The Federal Reserve issued a series of enforcement actions at banks that had partnered with Synapse last year, aimed at encouraging banks to shore up their risk management from working with the fintech sector, and the FDIC proposed a new rule in September that would require more robust recordkeeping from banks working with other companies. Biden’s approach to regulation was to “keep fintechs out,” said Michele Alt, cofounder of the financial services advisory firm Klaros Group. Trump is expected to be much more receptive.

That’s a double-edged sword. A more lenient approach could allow more fintech companies to pursue banking licenses—as Synapse attempted to do—providing regulators more visibility into their activities. But it could also boost their growth with more lax controls. “You could argue it either way,” said Alt.

While Trump’s FDIC has not yet signaled its approach to supervising the fintech sector, its workforce of bank examiners is likely to be reduced as part of the budget-slashing underway, led by Elon Musk’s Department of Government Efficiency. Trump’s administration has also ordered mass layoffs at the Consumer Financial Protection Bureau—an agency explicitly created in the wake of the 2008 financial crisis to help users impacted by catastrophes like Synapse’s—though it has not yet stepped in to address this collapse.

Nearly everyone seems to agree that the current system didn’t work, with existing regulations doing little to prevent the fiasco. During January’s bankruptcy hearing, McWilliams said that she had already reached out to people she expects to serve under the Trump administration, imploring them to step in—“both as a warning and a threat,” as she put it. Tennessee Congressman John Rose asked Federal Reserve Chair Jerome Powell about Synapse and Evolve at a February oversight hearing, and Powell offered a brief response that he would follow up on any “violations of the law,” to the extent that there are any.

There are signs that legal enforcement action could be on its way. In late January, a court filing revealed that the Justice Department’s Southern District of New York office had convened a grand jury related to a criminal investigation into Synapse, dating back to at least October 2024. According to the filing, prosecutors issued a subpoena to Synapse’s former corporate controller, Victor Medeiros, and are investigating different criminal violations, including accounting and wire fraud.

According to people familiar with the investigation, who spoke on the condition of anonymity to discuss legally sensitive matters, prosecutors have reached out to parties involved with Synapse to discuss the shortfall and the company’s relationship with Evolve. (The financial analyst and entrepreneur Jason Mikula first reported the investigation.) A lawyer for Medeiros, who has not been accused of any wrongdoing, did not respond to multiple requests for comment. A spokesperson for SDNY declined to comment.

For his part, Pathak said that he has not been contacted by prosecutors. He says he’s more focused on his new company, Foundation, whose bare-bones website promises that it will build “advanced humanoid robots” for warfare. The company hosted an event in late January to show off its first robot, named Phantom, DJing at a nightclub in San Francisco.

Pathak says his main takeaway from the Synapse saga is that AI is the path forward. “This demonstrates more than anything else that people fail, and systems run by people fail,” he told Fortune. “For you to be able to avoid that, it needs to be mostly all machines.”

One former employee disagreed strongly with this abstract narrative of the company’s collapse, blaming it instead on the tech founder’s specific strategic missteps. “Synapse, as a company, was a gambler,” the employee said. “And sometimes you win, sometimes you lose. But let’s be honest—a lot of times you lose.”

The spectacular Synapse collapse: The ugliest divorce in fintech left $200 million in customer money frozen—and shows the risks of financial apps