Fintech Update, 5/6 - 5/12

May 13, 2024

Hi! It’s Monday, May 13, 2024

The news of Synapse’s bankruptcy and sale continues to get messier as Tabapay has decided to pull out from its agreement to purchase the assets of the troubled banking-as-a-service platform. The decision comes as Synapse, partner bank Evolve, and customer Mercury fight amongst themselves about nearly $50 million allegedly moved incorrectly and needing reconciliation by Evolve. According to Synapse CEO Sankaet Pathak, “Evolve had communicated that it would be funding its FBO accounts as required by the parties’ settlement agreement, but . . . they have not. Given that open issue – TabaPay is unable to close the transaction.” Meanwhile, Evolve claims it has met its requirements, Mercury says Pathak’s allegations have “no merit,” and TabaPay is probably thinking, yeah, this is too much confusion to be worth it… Stay tuned.

The CFPB fined Chime $3.25 million for delaying refunds to customers closing accounts, highlighting the regulator’s growing scrutiny of fintech firms. The CFPB found that thousands of Chime customers had to wait weeks or even months for refunds after closing their accounts with the company, despite the neobank’s policy of 14 day refunds. Chime will also return $1.3 million to affected customers.

Nearly 90% of tracked stablecoin transactions do not involve a human (they’re performed by bots), according to recent data published by Visa and blockchain data provider Allium. The analysis suggests that only $149 billion out of the total of $2.2 trillion in stablecoin transactions recorded last month can be attributed to “organic” payments activity, calling into question their value as a form of payment.

FTX said it will repay nearly all of its customers, two years after the fraudulent cryptocurrency imploded, and some customers will receive more than what they are owed. FTX owes some $11.2B to its creditors, and has between $14.5B and $16.3B to distribute them. Crypto prices have soared in the two years it’s taken for the exchange to recover assets from Alameda and FTX Ventures.

Mercury announced that it is incorporating bill pay and spend management software into its offering, competing with the likes of Brex and Ramp. Initial features include accounting automation, account-integrated bill pay software, invoicing, and employee reimbursement. To refresh your memory, a few weeks ago Mercury announced the launch of its personal banking product. Our take? Launching a spend management offering is a great bridge between Mercury’s business banking users and its target demographic of high-earning consumers, enabling the fintech to more deeply embed itself into the financial behavior of end employees.

After announcing in February, Revolut’s UK crypto exchange Revolut X is now live for experienced traders. Though Revolut users are already able to buy and sell crypto via the Revolut app, the fintech is among the first banks to build a standalone crypto exchange. To incentivize trading, Revolut is initially charging very low fees (zero fees to the maker of a trade and 0.09% to the taker of a trade).

Nubank announced that it passed 100M customers across Brazil, Mexico, and Colombia, making it “the first digital banking platform to reach this milestone outside of Asia.” Nubank claims 92M customers in its home country of Brazil, or ~40% of the population.

Former Congressman Jeb Hensarling (now with the Cato Institute) railed against the FDIC’s “campaign against fintech companies”. “With no authorization from Congress, the bank regulator tries to suppress these innovative firms.”