The situation deteriorated in April after Synapse declared bankruptcy following the exodus of several key partners. That has left users of several fintech services stranded with no access to their funds, according to testimonials filed this week in a California bankruptcy court. One customer, a Maryland teacher named Chris Buckler, said in a May 21 filing that his funds at crypto app Juno were locked because of the Synapse bankruptcy. Synapse had contracts with 20 banks and 100 fintech companies, resulting in about 10 million end users, according to an April filing from founder and CEO Sankaet Pathak. The freeze-up of customer funds exposes the vulnerabilities in the banking as a service, or BAAS, partnership model and a possible blind spot for regulatory oversight.

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Persons: Andreessen Horowitz, Chris Buckler, Buckler, Dave, Juno, Sankaet Pathak, Pathak, Joseph Dominguez, Dominguez, Jason Mikula, Mikula Organizations: Istock, Synapse, Evolve Bank & Trust, Mercury, CNBC, Evolve Bank, Trust, Regulators, FDIC, Federal Reserve Locations: California, Maryland, Joseph Dominguez of Sacramento , California, Silicon