If I understand it correctly, the bank had an account in which Synapse put money. The bank knows how much money Synapse had in its account. This is all that the bank was responsible for. The people who were customers of Synapse's customers, were three levels removed from the bank.

I am neither a lawyer nor an accountant, this is just my understanding of the article.

I found an interview with the founder of Synapse and the setup was more complicated than that. It seems that client transactions were happening directly on the bank and the bank was notifying Synapse who were then updating their client balances.

If the bank screwed up this notification process then Synapse didn't necessarily know about it until the customers started complaining.

The notification process was some janky thing involving text files, cron and sftp and frequently failed. Sometimes it didn't work at all (which Synapse would spot) but sometimes it just omitted loads of transaction records.

And it gets worse from there with the bank allegedly pulling various shenanigans and Synapse being blissfully unaware.

I don't see how you can run a finance business when you have no oversight or control over what's happening.

https://lex.substack.com/p/podcast-what-really-happened-at-s...