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Tabapay acquired Synapse's assets

Apr 22, 2024
Illustration of a frowny face with "11" as the eyes.

Illustration: Shoshana Gordon/Axios

Banking as a Service provider Synapse said Friday it filed for bankruptcy protection and has agreed for its assets to be acquired by Tabapay.

Why it matters: It caps off a string of casualties in the Banking as a Service space, with regulatory crackdowns and the fintech slowdown cutting into the industry.

The intrigue: Neobank Mercury filed an arbitration demand against Synapse, its onetime partner, in December seeking some $30 million in damages.

  • Seeking to protect its claims in case of a Synapse bankruptcy, Mercury alleged that Synapse was insolvent and that "it is experiencing severe financial difficulties."
  • Synapse also cut 40% of its headcount in October.

What they're saying: Synapse CEO Sankaet Pathak blamed Mercury for its filing.

  • He wrote, in a LinkedIn comment (on a post from Simon Taylor): "Chap 11 is because of mercury and issues they've been creating behind the scenes. Without that, it would have been a sale like any other."

Of note: Synapse has raised over $50 million in funding from investors including a16z, Trinity Ventures and Core Innovation Capital.

What we're watching: A judge is expected to decide on the deal in about 30 days.

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