CHICAGO (WLS) — The ABC7 I-Team is investigating “frozen funds.”
High-yield savings accounts offer a secure way to earn higher interest on savings. However, a concerning situation has arisen where numerous individuals are questioning the whereabouts of their money after depositing it into an FDIC bank via a commonly used app.
This issue involves a significant sum of money, leaving many people across the country unable to access their savings accounts. Local consumers who placed their trust in both the app and the bank are now grappling with the frustration of having their “funds frozen.”
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Individuals like Konstantin Tarnorutskiy of Vernon Hills and Brendan Murphy of Lindenhurst have reported that while the app displays substantial balances in their accounts, they are unable to utilize or transfer these funds.
Both men put their money in high-yield savings accounts. The FDIC bank, which backed the accounts, was Evolve Bank and Trust, but the men used the fintech app “Yotta.” The app gives users the chance to win prizes for saving money.
It is like losing a house… t’s almost an unfathomable amount of money to lose, especially to not lose it doing something risky.
Zack Jacobs, ‘Fight For Our Funds’ website creator
Murphy said he thought his money was safe.
“High-yield savings was really what I wanted,” Murphy said. “And they set it up so that if the more money you save and you kept in there, you would get more bonuses. So it was that little carrot to keep saving.”
Tarnorutskiy was also intrigued by the promises of the app.
“It was convenient,” Tarnorutskiy said. “There’s usually a penalty with the high yield savings. This one, as long as you had their debit or credit card, then there would be no penalty to withdraw money if you needed to use it.”
Now they are some of the 85,000 customers who Yotta says were locked out of their accounts, in May of 2024.
“And then a week went by… no withdrawal,” Tarnorutskiy said. “Two weeks went by, no withdrawal. So all of a sudden, I tried taking all of my money out just to be safe, like, ‘Hey, what’s going on?’ And then all of the transactions got canceled.”
In a lawsuit Yotta filed against Evolve bank, Yotta alleges that since May 2024, “Yotta customers have had no access to the over one hundred million dollars in funds that they deposited with Evolve in good faith,” and that “Yotta has received thousands of messages from its customers, many of whom have lost substantially all of their assets to Evolve’s treachery.” But the FDIC-backed bank Evolve blames the missing funds on the recent financial collapse and bankruptcy of a middleman, Synapse Brokerage, which helped manage the money. In a motion to dismiss the lawsuit, Evolve said “it is Synapse’s conduct and not Evolve’s that is at issue.”
“The money doesn’t exist. It’s not held at Evolve,” Tarnorutskiy said. “So they did an audit of all their transactional logs, and they’re saying that the money doesn’t exist.”
Evolve Bank and Trust told the I-Team that it understands the frustration and it’s working to bring closure, but said that Synapse brokerage moved most of the funds away from Evolve. ABC7 reached out to Synapse, its bankruptcy attorney and its bankruptcy trustee, but haven’t heard back.
The app Yotta said its lawsuit speaks for itself, and that “since October, our customers have deposited over $125 million using an Evolve routing number. Evolve cards have processed over $80 million of transactions.”
In their statements to the I-Team, Yotta and Evolve are pointing the finger at each other about what led up to the problems, and the Synapse bankruptcy.
Former Illinois resident Zack Jacobs created the website “Fight For Our Funds” after losing $100,000.
“Yeah, I mean… it is like losing a house,” Jacobs said. “It’s terrible… I hadn’t touched it in a while, so it was sort of out of sight, out of mind… it’s almost an unfathomable amount of money to lose, especially to not lose it doing something risky.”
So far, Jacobs has brought together about 6,700 people who say they can’t access more than $51 million, with an average loss of about $7,500.
“There’s no answers as to where the money went, no answers as to who it has, just that we don’t have it,” Jacobs said.
Evolve bank does have a program through which some funds are being returned, “using transaction data from the Federal Reserve System.” The bank said customers “deserve to know where their money is. Period.” The bank said it will continue to return the funds which it has.
Jacobs got back $128 out of $94,468 from Evolve. Murphy is getting back about a third of his $2,800. Tarnorutskiy didn’t get a dime of his $7,458.
“The thing that really bothers me is they’re asking us to trust their accounting,” Murphy said. “They didn’t show any proof.”
Both Murphy and Tarnorutskiy have filed complaints with government agencies as they wonder where their money is.
“They’re just saying it’s under investigation, but we know how government bureaucracy works,” Tarnorutskiy said. “It could be five years until anybody hears anything or just gets swept under the rug.”
Evolve also said more money is being returned this week and that it’s continuing to search for the funds, adding it’s prepared to pay for costs to analyze data, but that none of the “Synapse system banks” have agreed to share it. Evolve said it needs the data to make sure the right amounts are found and returned.
Those affected by the problem can use these resources:
Illinois Department of Financial and Professional Regulation: https://idfpr.illinois.gov/admin/banks/dobcomplaints.html
FDIC: https://www.fdic.gov/consumer-resource-center/consumer-complaint-process
Federal Reserve: https://forms.federalreserveconsumerhelp.gov/secure/complaint/complaintType.html
More resources: https://www.usa.gov/bank-credit-complaints
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