TabaPay Abandons Synapse Acquisition Amid Fintech Partner Dispute
Deal Collapse Highlights Industry Tensions
Instant payments provider TabaPay has officially withdrawn from its planned acquisition of bankrupt banking-as-a-service platform Synapse, according to company statements. The failed deal reveals ongoing conflicts between key players in the fintech ecosystem, with Synapse, Evolve Bank & Trust, and Mercury offering conflicting accounts of responsibility.
Key Developments in the Failed Acquisition
- Termination Confirmed: TabaPay sent official notice terminating the purchase agreement due to unmet closing conditions
- Court Declaration: Synapse’s counsel announced the deal collapse in bankruptcy court on Thursday
- Disputed Reasons: Parties involved offer contradictory explanations for the deal’s failure
The Blame Game: Competing Narratives
Synapse’s Position
CEO Sankaet Pathak maintains that banking partner Evolve Bank & Trust failed to meet critical funding requirements:
- Claims Evolve didn’t fully fund “For Benefit Of” (FBO) accounts as required
- Alleges Evolve provided false information about account funding status
- Believes TabaPay remains interested if conditions are met
Evolve Bank’s Response
The financial institution denies responsibility:
- States it wasn’t party to the TabaPay acquisition
- Claims it fulfilled all obligations under its settlement with Synapse
- Maintains it had no closing conditions to meet
Mercury’s Involvement
The business banking startup rejects Synapse’s allegations:
- Calls claims “manufactured” after Mercury sued Synapse in December 2023
- Denies any FBO account overdrafts occurred
- States all customer funds are properly accounted for
Background: Synapse’s Downfall
Founded in 2014, Synapse provided middleware connecting banks and fintech companies. The company’s troubles escalated when:
- Key partners Evolve and Mercury bypassed Synapse to work directly together
- Filed for Chapter 11 bankruptcy in April 2024
- Previously laid off 40% of staff in October 2023 following earlier cuts
Financial Implications
The collapsed $9.7 million acquisition represents a significant loss for Synapse investors including:
- Andreessen Horowitz
- Trinity Ventures
- Core Innovation Capital
This falls far short of the $50+ million in venture capital Synapse raised during its operations.
What’s Next for the Players
- TabaPay: The SoftBank-backed payments company may seek alternative acquisition targets
- Synapse: Faces uncertain future as bankruptcy proceedings continue
- Evolve & Mercury: Likely to continue their direct partnership despite Synapse’s allegations
This situation highlights the complex interdependencies in fintech partnerships and the challenges that arise when relationships sour. The outcome may influence future deal structures and partnership agreements across the industry.
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