Fools who believe there is risk free 2x yields and their money are soon parted:
“Users save money, get over 2x the national average in interest and weekly chances to win additional prizes up to $10 million through weekly random number drawings.”
Their website barely mentions they’re a bank, it says everywhere “ WIN MONEY!!!”… looks like one of these online casinos. And the About Us page is password protected.
To be fair, the national average interest rate is only ~0.46%, which is insanely low considering how many banks are now offering 4-5%. Offering 2x the national average is still low.
The $10M random number drawings are definitely shady as hell, though.
They were apparently bad at keeping track of their money, with "tens of millions of dollars are unaccounted for," despite some "partners of its venture backers such as Andreessen Horowitz" having allegedly been "aware of such discrepancies" [2].
Wow, "CEO Sankaet Pathak called into the bankruptcy hearing from Santorini island in Greece, and the general counsel Tracey Guerin was in Rome" [1]. Someone at the DoJ is going to make a career out of this guy.
Whenever I see this type of bravado I always assume they are putting on a brave face because things are far worse than they appear. It's the cavalier attitude towards taking other peoples money.
Hey, can you go into this more? When I search Adderall bravado online, your post is the top result. I have a friend whose behavior changed wildly after being prescribed Adderall, so I am interested in learning more.
Disclaimer: I am not diagnosed but believe I have ADHD.
I use Vyvanse casually and when it’s active in my system I go from a very timid and shy person to a public speaker.
I’ve been working on my anxiety separately, but even at its worst I could pop one pill and it would disappear. I could go up to strangers and talk to them about anything, or I could stand up in the middle of a mall and call for everyone’s attention.
It was very cathartic as someone who has suffered from anxiety (at least) for a long time. Some of that feeling lasts for a while too. I regret not trying medication to fix some of my mental health issues before and I’d love to be on a prescription right now. I really think taking it consistently could change my life.
Stimulants make your brain go brrr. I know they increase dopamine levels and so on, but I have no idea how that translates into personality. I think a friend coined the term talking about SBF. I also know they can cause mania in people with BPD.
From personal experience, they make you feel like you're on top of the world. You can get so much done. Although obviously in some people they just help you focus a normal amount.
He's calling a specific customer an idiot and moron.
Someone who's funds are probably locked up right now posted an interview that the Synapse founder did, saying that doing podcasts "in the middle of the lunacy" is absolutely insane.
Founder replies "this was BEFORE the deal fell apart, you are such an absolute idiot" to that...
Although, that customer is right it's insane to be going on podcasts and Greek weddings when you have thousands of customers out millions of $...
Then in the podcast, this founder doesn't even take any responsibility! He's saying it's some investors fault! That he had a $100m term sheet, where he was going to use investor capital to buy a bank charter and that's how his company was going to work. (nvm that it's purely self-interested, you have a $0 company right now, but you'd sure like 20% of a $200m company with $100m in the bank instead) Like, you already burned $50m of investors money with nothing but peoples frozen accounts to show for it, and you're surprised when they don't want to throw another $100m?
Andreessen Horowitz is a known grifter and scammer. I don't know why anyone associates his firm with anything well thought out instead of a pyramid scheme. Just because he can famoozle big money out of old pension funds doesn't mean he knows much about startups.
It seems you are under the impression that the venture capital firm cofounder by Marc Andreessen and Ben Horowitz was created by a single individual.
If you can’t get basic facts correct no one is going to take your other claims seriously. A16Z has a diverse portfolio of investments and are as famous as they are because of how successful their companies have been.
From what I understand, it didn't look like that when most users signed up -- it looked like a gimmicky bank account with a savings account that a portion of the interest was invested in a lotto-style system, so you were earning slightly less interest plus some chance to win a large payout. This is a lot different than what they "pivoted" to after accepting user deposits.
Glad I took mine out a couple years ago and put it in a high interest savings account. Gamified savings and articles about it got me more interested in my personal finances. So for that I'm thankful.
Consider a money market fund consisting of high quality government debt at your brokerage. You may be able to avoid state income tax on the income depending on your circumstances.
with real premium bonds you are lending your money to the government treasury, which is as close to zero risk as you can get
meanwhile yotta is some shitty VC funded startup operated and invested in by people who think following regulations is something only other people need worry about
(and then they go crying for a government bailout when their bank collapses because they have no understanding of concentration risk)
Which then directs you to contact ANOTHER COMPANY to confirm… that your money at Yotta is held by a 3rd party bank in an FDIC insured account.
Honestly I feel like they are referring to FDIC in bad faith with this weird non answer scavenger hunt.
Is the core problem that Yotta expected synapse to distribute funds to program banks, and now Synapse and the banks books don’t agree? So even if you checked with Synapse, would they have directed you to the bank with your money for confirmation— or is it all commingled funds anyways?
I run a kind of similar service to Yotta (though we haven't launched to consumers yet, and don't have the gimmick of investing some portion of your interest into a lotto-style system).
Coffeezilla (linked in another comment) did a good job explaining it.
Yotta isn't a bank and doesn't hold user funds -- those funds are at a bank (almost definitely, unless they're breaking the law which I have no reason to suspect), and the bank pays FDIC insurance on each of them. This means the funds are safe against a variety of threats, but not all. Being at a bank is also not the same thing as being available (though banks do have availability reporting and capability requirements).
From what I recall Yotta contracts with Synapse for integrating into a bank, and the issue is between Synapse and the bank they work with.
Depending on who maintains the authoritative copy of the ledger (the bank or Synapse), the bank may only know the total amount in all combined user accounts and periodically audits of individual accounts -- so they could have ended up in a situation where $X in the bank for Y users, but the total on the Synapse's ledger for that same set of Y users exceeds $X, something which is never supposed to happen unless you're a (highly regulated) bank.
If that happened there would probably need to be a much more detailed and time consuming audit of every transaction to determine the "real" balance of each account, and figure out why it doesn't match the total the bank has.
Depending on how Synapse implemented their ledger (and this is continuing to assume they are the system of record), that may involve restoring backs and trying to piece together everything from data that was not necessarily intended for this purpose.
Because, in this scenario, the bank doesn't know who owns which dollars it has in Synapse's account it can't give those dollars back to their depositors.
If worse comes to worse, the bank will sort it out by asking depositors for proof of deposits and then try to correlate those to Synapse's best guess at data that matches total deposits.
If Synapse did something with user funds (not the data on their ledger, the actual dollars) other than what the user directed, then there could be big trouble for them and I'm not sure if the FDIC coverage helps there, or if it will be a civil process to try to make everyone whole, or something else entirely.
Based purely on the reporting I've overheard and no direct insight (or even researching it beyond the reddit post and this thread), that's my best guess as to what is happening.
Asking for proof of deposits? Like statements? I mean in an ideal world I’m backing up my monthly PDF from my bank account (but for some reason it is not emailed to me, instead I have to login and navigate Byzantine menus to generate a statement).
Did Yotta email statements or just have users check in app?
All of these venture-capital-backed companies trying to pretend that they are insuring vast amounts of customer money by making random deposits in other banks are just committing fraud. FDIC insurance specifically isn't for this use case (and doesn't insure against the VC-backed company failing or stealing your money in any case!).
> their site seems to imply the program banks will provide FDIC insurance
FDIC insurance doesn't cover things like this. It only covers a bank failure, and the bank Yotta was using (which is the entity that has the insurance) hasn't failed.
A silver lining to this may be that more people will better understand what FDIC insurance does and does not cover. People tend to think that if it's FDIC insured, then there's no way they can lose their money. That just isn't true, and the risk is greater if using a fintech service.
> SAVE MONEY AND WIN PRIZES UP TO $10M THROUGH WEEKLY NUMBER DRAWS.
> Users save money, get over 2x the national average in interest and weekly chances to win additional prizes up to $10 million through weekly random number drawings.
These are the kinds of companies YC invests in. Then the moderators here at HN go around telling users that they should apply to YC. As if an investment from YC is something to be proud of.
Why is this a bad thing? The psychological draw of gambling is very strong. Independent of execution, it seems like this product harnesses that aspect of human psychology to get people interested in saving money. Governments have utilized this same model effectively to entice citizens to save and invest: https://en.m.wikipedia.org/wiki/Premium_Bond
YC investors, like all other investors, are only interested in making money. You don't make money by paying people twice as much interest as everyone else. Something is fishy.
Not all investors are only interested in making money. That's why so many investment vehicles take into account ESG scores. Or why people refuse to invest in cigarette companies.
For what it's worth the claim is "2x the national average in interest", the national average in interest is incredibly low as many people have their money in checking/savings accounts at large banks with near 0% interest rates. It's very possible to give people twice the national average and still make money on the spread between that and the ~5.5% short term treasury yield.
Marcus by Goldman Sachs claims their rate is "8x the national average" at 4.40% and I'm sure they're making money just fine too.
Who is paying for the prizes? I would wager a wild guess that it’s the bank, and they’re probably doing it instead of offering a decent interest rate.
Also, trying to teach people to save money by teaching them to gamble is… not a good idea. Any number of reputable banks would love to teach someone to save money, it’s just not nearly as fun as gambling.
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54 comments
[ 4.3 ms ] story [ 122 ms ] threadand look at all the recent Reddit threads on Yotta: https://old.reddit.com/r/yotta/
Here's the YCombinator page for them: https://www.ycombinator.com/companies/yotta
“Users save money, get over 2x the national average in interest and weekly chances to win additional prizes up to $10 million through weekly random number drawings.”
What a joke.
The $10M random number drawings are definitely shady as hell, though.
This is being caused by the Synapse/Evolve dispute
They were apparently bad at keeping track of their money, with "tens of millions of dollars are unaccounted for," despite some "partners of its venture backers such as Andreessen Horowitz" having allegedly been "aware of such discrepancies" [2].
[1] https://www.cnbc.com/2024/06/01/synapse-bankruptcy-yotta-acc...
[2] https://www.theinformation.com/articles/inside-the-collapse-...
"I am sorry, I should not have called you an idiot. That wasn't nice. You are a moron."
from the Greek island of Santorini.
https://x.com/sankaet/status/1790563922732544367
[1] https://prospect.org/justice/2024-05-24-judge-appoints-trust...
Unbelievable.
I use Vyvanse casually and when it’s active in my system I go from a very timid and shy person to a public speaker.
I’ve been working on my anxiety separately, but even at its worst I could pop one pill and it would disappear. I could go up to strangers and talk to them about anything, or I could stand up in the middle of a mall and call for everyone’s attention.
It was very cathartic as someone who has suffered from anxiety (at least) for a long time. Some of that feeling lasts for a while too. I regret not trying medication to fix some of my mental health issues before and I’d love to be on a prescription right now. I really think taking it consistently could change my life.
From personal experience, they make you feel like you're on top of the world. You can get so much done. Although obviously in some people they just help you focus a normal amount.
Someone who's funds are probably locked up right now posted an interview that the Synapse founder did, saying that doing podcasts "in the middle of the lunacy" is absolutely insane.
Founder replies "this was BEFORE the deal fell apart, you are such an absolute idiot" to that...
Although, that customer is right it's insane to be going on podcasts and Greek weddings when you have thousands of customers out millions of $...
Then in the podcast, this founder doesn't even take any responsibility! He's saying it's some investors fault! That he had a $100m term sheet, where he was going to use investor capital to buy a bank charter and that's how his company was going to work. (nvm that it's purely self-interested, you have a $0 company right now, but you'd sure like 20% of a $200m company with $100m in the bank instead) Like, you already burned $50m of investors money with nothing but peoples frozen accounts to show for it, and you're surprised when they don't want to throw another $100m?
https://www.youtube.com/watch?v=bBUkajbg688
If you can’t get basic facts correct no one is going to take your other claims seriously. A16Z has a diverse portfolio of investments and are as famous as they are because of how successful their companies have been.
https://www.bogleheads.org/forum/viewtopic.php?t=398408
https://www.bogleheads.org/forum/viewtopic.php?t=395586
It's going to take a very long time for Yotta users to recover their funds methinks hopefully they still have some sense and return the funds
Entire VC model is broken
meanwhile yotta is some shitty VC funded startup operated and invested in by people who think following regulations is something only other people need worry about
(and then they go crying for a government bailout when their bank collapses because they have no understanding of concentration risk)
Which then directs you to contact ANOTHER COMPANY to confirm… that your money at Yotta is held by a 3rd party bank in an FDIC insured account.
Honestly I feel like they are referring to FDIC in bad faith with this weird non answer scavenger hunt.
Is the core problem that Yotta expected synapse to distribute funds to program banks, and now Synapse and the banks books don’t agree? So even if you checked with Synapse, would they have directed you to the bank with your money for confirmation— or is it all commingled funds anyways?
Coffeezilla (linked in another comment) did a good job explaining it.
Yotta isn't a bank and doesn't hold user funds -- those funds are at a bank (almost definitely, unless they're breaking the law which I have no reason to suspect), and the bank pays FDIC insurance on each of them. This means the funds are safe against a variety of threats, but not all. Being at a bank is also not the same thing as being available (though banks do have availability reporting and capability requirements).
From what I recall Yotta contracts with Synapse for integrating into a bank, and the issue is between Synapse and the bank they work with.
Depending on who maintains the authoritative copy of the ledger (the bank or Synapse), the bank may only know the total amount in all combined user accounts and periodically audits of individual accounts -- so they could have ended up in a situation where $X in the bank for Y users, but the total on the Synapse's ledger for that same set of Y users exceeds $X, something which is never supposed to happen unless you're a (highly regulated) bank.
If that happened there would probably need to be a much more detailed and time consuming audit of every transaction to determine the "real" balance of each account, and figure out why it doesn't match the total the bank has.
Depending on how Synapse implemented their ledger (and this is continuing to assume they are the system of record), that may involve restoring backs and trying to piece together everything from data that was not necessarily intended for this purpose.
Because, in this scenario, the bank doesn't know who owns which dollars it has in Synapse's account it can't give those dollars back to their depositors.
If worse comes to worse, the bank will sort it out by asking depositors for proof of deposits and then try to correlate those to Synapse's best guess at data that matches total deposits.
If Synapse did something with user funds (not the data on their ledger, the actual dollars) other than what the user directed, then there could be big trouble for them and I'm not sure if the FDIC coverage helps there, or if it will be a civil process to try to make everyone whole, or something else entirely.
Based purely on the reporting I've overheard and no direct insight (or even researching it beyond the reddit post and this thread), that's my best guess as to what is happening.
Did Yotta email statements or just have users check in app?
FDIC insurance doesn't cover things like this. It only covers a bank failure, and the bank Yotta was using (which is the entity that has the insurance) hasn't failed.
A silver lining to this may be that more people will better understand what FDIC insurance does and does not cover. People tend to think that if it's FDIC insured, then there's no way they can lose their money. That just isn't true, and the risk is greater if using a fintech service.
> SAVE MONEY AND WIN PRIZES UP TO $10M THROUGH WEEKLY NUMBER DRAWS.
> Users save money, get over 2x the national average in interest and weekly chances to win additional prizes up to $10 million through weekly random number drawings.
These are the kinds of companies YC invests in. Then the moderators here at HN go around telling users that they should apply to YC. As if an investment from YC is something to be proud of.
Marcus by Goldman Sachs claims their rate is "8x the national average" at 4.40% and I'm sure they're making money just fine too.
The national average is only 0.46%, according to https://www.marketwatch.com/guides/savings/average-savings-a...
I checked many other sources, all reporting in the 0.45-0.6% range.
Meanwhile, there are plenty of banks that offer 5% or more. So merely being twice the average is actually still pretty low.
Also, trying to teach people to save money by teaching them to gamble is… not a good idea. Any number of reputable banks would love to teach someone to save money, it’s just not nearly as fun as gambling.
even worse