[gwbas1c]

> In June, the FDIC made it clear that its insurance fund doesn’t cover the failure of nonbanks like Synapse, and that in the event of such a firm’s failure, recovering funds through the courts wasn’t guaranteed.

It seems they should be able to sue Evolve (the bank), given that they money is there, and there's proof that the money's there.

IE, the risk of 3x damages should be enough to scare the bank into paying out.

[lesuorac]

Paying _who_ out?

Yotta is who the people gave their money to. Yotta then used Synapse (which went bankrupt) to actually deposit the money into not-per-user accounts at 4 different banks. As-in, if you had an account with Yotta your money would be co-mingled with thousands+ other individuals into a singular Evolve account.

Evolve has no proof that your money is within the account Synapse held with them. As-in your money could be at one of the 3 other banks.

Yotta is the one being irresponsible for not keeping track of how Synapse split the funds. (Although arguable Evolve shouldn't keep co-mingled funds since that sounds like a KYC violation).

--

This is why not only does your broker not hold your stocks for you, they also tell the holding company who owns them.

Yotta is speed running the financial system's previous failures.

[throwup238]

> Yotta is speed running the financial system's previous failures.

The theme of the 21st century so far seems to have been “speed running the 20th.”

[lxgr]

> This is why not only does your broker not hold your stocks for you, they also tell the holding company who owns them.

Are you sure about that?

I believe modern common practice in the US and many other countries is for the stock to be held by the depository in the brokerage name (which is referred to as "street name" ownership), and only the brokerage to have customer-level records.

[lesuorac]

https://www.investopedia.com/ask/answers/185.asp

> That doesn't mean the investor doesn't own the securities it bought. It's just a formality. As part of the process, the broker will assign all ownership rights to the investor by registering the client as the beneficial owner.

There was a quip about this in one of the moneystuff or bitsaboutmoney but not too sure which one.

[lxgr]

You definitely do own them in a legal sense, but in a bookkeeping sense, there is a very real difference between the depository and your broker maintaining ownership records.

Legal ownership is what makes your claims worth anything in a court of law, and protects them against those of other creditors, but without proper bookkeeping, you have no evidence a court could even consider.

[lostmsu]

>> In June, the FDIC made it clear that its insurance fund doesn’t cover the failure of nonbanks like Synapse, and that in the event of such a firm’s failure, recovering funds through the courts wasn’t guaranteed.

Sounds like this would apply to other non-banks like Mercury.

[pushcx]

Yes. Mercury, which is not a bank and has never publicly claimed that it plans to become a bank, is reportedly trying to recover $30 million in missing customer funds from Synapse: https://www.forbes.com/sites/emilymason/2023/12/20/with-syna...

I've held a (trivial) business account at Mercury since before Synapse collapsed. Mercury has never attempted to notify me about missing customer funds, potential customer losses, or the lawsuit stemming from the collapse of their banking partner.