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TabaPay ditches plan to buy assets of bankrupt BaaS firm Synapse

TabaPay ditches plan to buy assets of bankrupt BaaS firm Synapse

Money moving fintech TabaPay has pulled out of a deal to buy the assets of bankrupt Banking-as-a-Service platform Synapse.

A TabaPay spokesperson has told TechCrunch that it has sent a “termination notice of the purchase agreement this morning based on failure to meet the purchase agreement closing conditions”.

The news was first reported by Fintech Business Weekly’s Jason Mikula.

TabaPay agreed to buy Synapse's assets in April, months after the BaaS outfit laid off 40% of its workforce after losing a major client. That followed an earlier round of layoffs that impact 18% of its staffing roster in response to changing "macro-economic conditions".

Synapse CEO Sankaet Pathak tells TechCrunch that that he believes TabaPay is still interested in closing the acquisition but that the deal fell through because banking partner Evolve Bank & Trust "failed to meet their closing condition".

That condition is that Evolve must fully fund its For Benefit Of (FBO) accounts, according to Pathak.

However, Evolve disputes this, telling TechCrunch: “Evolve was not party to the Tabapay (sic) acquisition, and we did not have closing conditions to meet. However, we did have a settlement agreement with Synapse that had a funding condition. Evolve satisfied that condition.”

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 May, 2024, 13:44Be the first to give this comment the thumbs up 0 likes

Aforementioned Jason Mikula just posted on X fka Twitter that end users are losing access to funds in this fracas.Which is not surprising.

When Neobank / BaaS / Fintech ("Fintech") does not have a banking license and works on top of an underlying Sponsor Bank with banking license, end user accounts in fintech do not necessarily map 1-to-1 with account(s) in Sponsor Bank. While FDIC will cover customer balances if Sponsor Bank goes bust, it won't come into the picture if Fintech goes bust. Whether end users get their money back in the Fintech's bankruptcy procedings depends on the T&Cs of the FBO account held by the Fintech at the Sponsor Bank.