The bankruptcy of Synapse has ignited a crisis for multiple fintech firms and their customers, as they now struggle with frozen assets and lost services. This situation calls into question the sustainability of the BaaS model, which relies on collaborative relationships to function effectively. Observers are now reconsidering the implications of having one key player fail and the ripple effects it generates throughout the fintech ecosystem.
Over $160 million in deposits remain trapped due to Synapse's chapter 11 filing, demonstrating the reality that many fintechs are deeply interconnected. When such a fundamental service provider falters, it has immediate and significant consequences for smaller fintech companies depending on them for operational capabilities.
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