Stranch, Jennings & Garvey (SJ&G) has filed a class action lawsuit against Evolve Bank & Trust and Lineage Bank over the alleged mismanagement of customer funds following the collapse of fintech company Synapse Financial Technologies.
Filed April 4 in the U.S. District Court for the Western District of Tennessee on behalf of plaintiff Dustin Justus, who represents the class, the lawsuit accuses the two former Synapse partner banks — along with Evolve’s parent company, Evolve Bancorp — of negligence and failure to maintain proper oversight of customer funds.
Synapse served as a middleware platform between fintech apps like Yotta and Juno and the banks holding customer deposits. However, after Synapse filed for bankruptcy in April 2024, it came to light that approximately $85 million in customer funds across 100,000 customers had gone missing and discrepancies in ledger records emerged. The complaint alleges the banks lacked contingency plans and failed to maintain their independent ledgers, contributing to missing or unreconciled funds.
Justus claims he lost more than $4,400 after attempting to withdraw his savings from the Yotta app, which partnered with Synapse, Evolve and Lineage.
“Despite defendants’ claims of completed reconciliations, thousands of customers still lack access to their deposits and are uncertain which institution is holding their money,” said J. Gerard Stranch IV, founding and managing member of SJ&G. “The defendants have not accounted for or returned all deposits belonging to fintech users. As a result, many customers have been unable to access their funds. The goal is simple — we hope to identify where the money actually went and make the class members whole.”
Regulatory scrutiny has compounded the banks’ woes. The Federal Reserve issued an enforcement action against Evolve in 2024 for deficiencies in its fintech risk management. Lineage entered a consent order with the FDIC in January 2025 requiring improved oversight and capital standards.
The lawsuit seeks restitution, damage and injunctive relief, while alleging unjust enrichment, negligence, breach of fiduciary duty and failure to account for or return customer funds.