Yotta Technologies has alleged once again that Evolve Bank & Trust stole millions of dollars from Yotta customers in a Ponzi or Ponzi-like scheme, this time in California state court.
The lawsuit, filed March 13, is one of several filed since May 2024, when Yotta users were locked out of accessing their own funds, held in part by the fintech’s partner bank Evolve.
At present, Yotta end users remain “deprived of $80 million of their funds,” and Yotta’s business has “los[t] essentially all value” due to Evolve’s alleged malfeasance, according to the lawsuit.
“Because of Evolve’s grotesque misconduct, Yotta’s business has been decimated. Yotta’s customers are rightly enraged at the loss of their funds,” the lawsuit alleged. “Many remain unwilling to use Yotta’s services going forward. Yotta’s reputation in the market, once sterling, has been tarnished, potentially beyond repair.”
The fintech “brings this case to vindicate its rights against the bank whose dereliction of duty threatens to bury Yotta’s once-promising business,” it said.
Yotta sued Evolve in federal court last year, levying Ponzi scheme allegations in what it described as “a case about a bank that utterly failed in its most basic duties to its customers.”
In February, Judge Trina Thompson ruled that Evolve did not have to face last year’s lawsuit because Synapse Financial, the now-defunct middleware company that connected the bank to the fintech, was a necessary party in Yotta’s claims against Evolve.
In the newest lawsuit, Yotta named Synapse as a second defendant, but noted that it did so “out of an abundance of caution” due to the federal judge’s ruling. Yotta has no intention of bringing claims against Synapse, according to the lawsuit.
Yotta also filed an appeal to the federal case in U.S. Court of Appeals for the Ninth Circuit, listed on the docket March 13.
“Evolve engaged in a single fraudulent scheme to (a) lie to Yotta and others about Evolve’s controls, technology, and capability, (b) steal customers money, and (c) go to great lengths to conceal and lie about its theft, including by providing false and misleading transaction and account balance information to Yotta and its end users,” according to the March 13 lawsuit.
“[E]volve did anything and everything it could to avoid the consequences of the deficit in end user funds, ultimately paying out only a fraction of what the end users are owed,” according to the lawsuit.
Spokespeople for Evolve and Yotta both declined to comment on active litigation. Sankaet Pathak, founder of Synapse, did not respond immediately to a request for comment.
Pathak, meanwhile, co-founded Foundation, a company that makes humanoid robot soldiers and was featured last month in Time magazine.
Users continue to wait for funds expected to be disbursed by the Consumer Financial Protection Bureau’s civil penalty fund.
According to r/yotta, a sub-Reddit that has been the de facto homepage for those locked out of funds tied up in the Yotta-Evolve-Synapse saga, many still await the return of their money.
“Out $53k… I don’t even have strength anymore,” one user wrote in a comment last month. “I never thought that this whole crap show would last as long as it has.”
