Should venture capitalists be held accountable when startups screw up?

Welcome to TechCrunch Fintech! Last week was a holiday in the United States, so news was a bit lighter than normal. But there was still fintech-related items to report, including the ongoing drama around Synapse and partner Evolve Bank, Revolut’s record year and more.

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The big story

Evolve Bank’s data breach is still playing out in fintech, with several startups feeling the impact of the mess. Yieldstreet, for one, last week confirmed some of its customers were affected. Meanwhile, Fintech Business Weekly author Jason Mikula said he received a cease-and-desist letter from the bank, asking him not to share files from the dark web with any allegedly impacted fintech companies. “As I understand it, some fintechs hadn’t gotten ‘confirmation’ from Evolve about what had been breached and thus hadn’t acted to mitigate risk or inform users,” Mikula told TechCrunch. And, a group of senators banded together to urge Synapse’s owners and fintech and bank partners (including Evolve) to “immediately restore customers’ access to their money.” As part of their demands, the senators implicated both the partners and investors of the company such as Andreessen Horowitz (a16z) as being responsible for missing customer funds.

The latest in the saga involves a new dispute between fintech middleman Synapse and its database provider, MongoDB, which is threatening efforts by independent advisers to return money to millions of customers of apps such as Juno and Yotta who have been cut off from their money for weeks, reports Bloomberg. 

Analysis of the week

Revolut revealed last week that its full-year pre-tax profit rose to a record $545 million in 2023 after gaining 12 million customers during the year. (Yes, profit. Impressive.) Nikolay Storonsky, Revolut’s CEO and co-founder, told CNBC that the digital bank is “confident” about securing its British bank license. The bank also hinted at an IPO in its annual report, saying that it had “enhanced” its financial controls in the ways that “listed companies” do. If/when it does go public, some former execs may be feeling a bit regretful about leaving the company. Revolut was last valued at $33 billion when it raised $800 million in 2021.

Dollars and cents

Investors are betting on Indian wealth tech startups as a growing middle class turns to diversify investments and startups challenge traditional financial advisers for high-net-worth clients, reports Manish Singh. Premji Invest is in advanced stages of talks to lead a funding round of $30 million to $40 million in Dezerv, an app offering a suite of investment solutions to India’s wealthy. And Lightspeed Venture Partners is in advanced talks to lead an investment round larger than $20 million in Centricity, a digital wealth management platform. More here.

What else we’re writing

Speaking of breaches, TechCrunch’s Devin Coldewey tells readers they shouldn’t worry that their secret ChatGPT conversations were obtained in a recently reported breach of OpenAI’s systems. He writes: “The hack itself, while troubling, appears to have been superficial — but it’s a reminder that AI companies have in short order made themselves into one of the juiciest targets out there for hackers. … The simple fact is that these AI companies have become gatekeepers to a tremendous amount of very valuable data.” Read more here.

High-interest headlines

Trever, an institutional operating system provider for digital assets, recently announced a €2.4 million seed investment co-led by TX Ventures (CH) and Market One Capital (LUX). The funding is aimed at boosting its presence in the European market, reports FinTech Global.

MUFG backs Thailand-based fintech unicorn Ascend Money in $195M funding

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