A dispute between a fintech startup and its banking partners has left potentially millions of Americans without access to their money for nearly two weeks, according to recent court documents.

Synapse, an Andreessen Horowitz-backed startup that acts as an intermediary between customer-facing fintech brands and FDIC-backed banks, has had disagreements with several of its partners about how much in customer balances it owed since last year. The situation escalated in April after Synapse declared bankruptcy following the exit of several key partners. On May 11, Synapse cut off access to a technology system that enabled lenders, including Evolve Bank & Trust, to process transactions and access account information, according to the filings.

This move has stranded users of several fintech services, leaving them with no access to their funds, as detailed in testimonials filed this week in a California bankruptcy court.

One customer, a Maryland teacher named Chris Buckler, said in a May 21 filing that his funds at the crypto app Juno were locked because of the Synapse bankruptcy. “I am increasingly desperate and don’t know where to turn,” Buckler wrote. “I have nearly $38,000 tied up as a result of the halting of transaction processing. This money took years to save up.”

10 Million ‘End Users’

Until recently, Synapse, which calls itself the biggest “banking as a service” (BAAS) provider, helped a wide range of U.S. fintech companies offer services such as checking accounts and debit cards. Former partners included well-known fintech firms like Mercury, Dave, and Juno, which cater to various segments including startups, gig workers, and crypto users.

Synapse had contracts with 20 banks and 100 fintech companies, resulting in about 10 million end users, according to an April filing from founder and CEO Sankaet Pathak.

Pathak did not immediately respond to an email from CNBC seeking comment. A spokesman for Evolve Bank & Trust declined to comment but pointed to a statement on the bank’s website that read, in part: “Synapse’s abrupt shutdown of essential systems without notice and failure to provide necessary records needlessly jeopardized end users by hindering our ability to verify transactions, confirm end user balances, and comply with applicable law.”

Unclear Reasons for Shutdown

It remains unclear why Synapse shut down the system, as an explanation could not be found in the filings.

‘We Are Scared’

Another customer, Joseph Dominguez of Sacramento, California, told the bankruptcy court on May 20 that he had more than $20,000 held up in his Yotta fintech account. “We are scared that money will be lost if Synapse can not provide ledgers and documents to Evolve or Yotta to prove we are the legitimate owners,” Dominguez wrote. “We don’t know where our direct deposit has gone, we don’t know where our pending withdrawals are currently held.”

The freeze-up of customer funds exposes the vulnerabilities in the banking as a service partnership model and a possible blind spot for regulatory oversight. The BAAS model, used notably by pre-IPO fintech firm Chime, allows Silicon Valley startups to utilize the capabilities of small FDIC-backed banks, helping these companies compete against the giants of American banking.

Regulatory Silence

Customers mistakenly believed that because funds are ultimately held at real banks, they were as safe and available as any other FDIC-insured accounts, said Jason Mikula, a consultant and newsletter writer who has tracked this case closely. “This is 10 million-plus people who can’t pay their mortgages, can’t buy their groceries. … This is another order of disaster,” Mikula said.

Regulators have yet to take a role in the dispute, partly because the underlying banks involved have not failed, the point at which the FDIC would usually intervene to make customers whole, Mikula added. The agencies have generally placed the responsibility on banks to manage their risks with fintech partners. The FDIC and Federal Reserve declined to comment.

A Dire Warning

In his plea to the judge, Martin Barash, to help the affected customers, Buckler noted that while he had other resources besides the locked account, others are not as fortunate. “So far the federal government is not willing to help us,” Buckler wrote. “As you heard, there are millions affected who are in far worse straits.”

Reached by phone on Wednesday, Buckler emphasized the need for public awareness: “I want to make people aware, yeah, your money might be safe at the bank, but it is not safe if the fintech or the processor fails,” he said. “If this is another FTX, if they were doing funny business with my money, then what?”