Major U.S. Bank Faces Lawsuit for Allegedly Mishandling Customer Funds, Leaving 85,000 People Unable to Access Their Savings

Yotta Technologies has filed a lawsuit against Evolve Bank & Trust, accusing the institution of fraud, conspiracy, and negligence.

A major U.S. bank is facing legal action for allegedly mishandling customer funds, which has left 85,000 individuals unable to access their savings since May 2024.

Yotta Technologies has initiated legal proceedings against Evolve Bank & Trust, the institution entrusted with safeguarding the deposits made by Yotta customers through a high-yield savings program.

In May 2024, customers of Yotta were locked out of their savings after the bank's fintech partner, Synapse, went bankrupt.

The lawsuit, seen by Blockworks, claims that over $25 million in transactions were carried out by Evolve without authorization or disclosure, including direct transfers to Synapse, which allegedly breached banking regulations and customer trust.

According to Yotta's investigation, a shortfall of between $65 million to $95 million exists in the customer accounts.

The lawsuit alleges that the transactions were not authorized by customers and that they were a coordinated effort between Evolve and Synapse to misappropriate the funds.

"Evolve's actions were fraudulent, willful, malicious, oppressive, and in reckless disregard for the rights of Yotta and its customers," the lawsuit reads.

"Evolve's unlawful and fraudulent conduct has led to a financial crisis with devastating consequences for thousands of individuals who entrusted their savings with Yotta in good faith."

Evolve has rejected the accusations, maintaining that the problem arose from incorrect account data provided by Synapse.

"We are deeply disappointed by Synapse's inability to maintain accurate customer information, which has led to significant hardship for both Yotta's customers and our own bank," an Evolve spokesperson said in May.

"To be clear, there were no issues with the FDIC insurance on customer deposits. All customer deposits were fully funded and disclosed in accordance with applicable banking and regulatory requirements."

Evolve has begun issuing partial repayments to the affected customers. To date, approximately $11 million has been returned to 13,300 customers, paying out only a fraction of the owed amount.