Chad Fenner thought he wasn't taking a gamble with his savings but still lost thousands of dollars. In 2021, he opened an account with Yotta, a savings app that marketed itself as a no-loss lottery — the more you save, the more free tickets you earn toward weekly prize drawings.
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• Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going He set up an auto-transfer of $50 every week or two, watched the balance grow and held on to the detail that mattered most: The deposits were FDIC-insured. The app said so on its website. "I was expecting the same thing as what I had already had in my credit union," Fenner says in a More Perfect Union documentary (1), "except the potential for greater interest returns." By May 2024, he had $23,419 saved. Then he tried to withdraw $10,000 — but couldn't. Two full years later, he still can't access his money. Fenner is one of 85,000 (2) Yotta customers who lost access to their accounts in a collapse that co-founder Adam Moelis said resulted in $112 million (3) of customer funds missing. The debacle, which is still unfolding, is a painful reminder that not every company that accepts your money will take good care of it — and it's not easy for ordinary people to know the risks. Yotta Technologies was not a bank. It was a financial technology company, which meant it couldn't hold deposits itself, so it routed customer funds through a San Francisco middleware company called Synapse Financial Technologies. Synapse then placed those funds at partner banks, including Arkansas-based Evolve Bank & Trust. Yotta pooled a portion of the interest earned on deposits and paid it out as lottery prizes. For every $25 saved, customers got one ticket in weekly drawings for a top prize of up to $10 million. And the app told customers their deposits were always safe, backed by FDIC insurance at the partner banks (4). What Synapse did with that money is what made the collapse so destructive. Rather than keeping a separate account for each customer, Synapse pooled thousands of people's savings together into large "for-benefit-of" accounts (5) held at partner banks. As the documentary puts it, a for-benefit-of account is like hundreds of people sharing one bank account (1). Only Synapse tracked how much of the pooled balance belonged to each person.