There are key differences between how Synapse operated and how Raisin's platform is designed. Some key factors that contributed to risks in the Synapse platform are not present in the Raisin setup, and we have deliberately structured our platform to mitigate such risks.
More specifically, Synapse opened a For Benefit Of (“FBO”) account at Evolve in its own name and acted as the account holder. In contrast, Raisin does not open FBO accounts in its own name at our partner banks. Instead, an FDIC-supervised bank opens the FBO account and enters into an agreement directly with Raisin’s customers to act as the custodian of their funds. This custodial bank is authorized by Raisin customers, as their agent, to hold their deposits at FDIC-insured banks on their behalf in a custodial capacity. At no point are customer funds co-mingled with Raisin’s funds.
Another key distinction is Raisin’s daily reconciliation process, which ensures that custodial banks always know precisely how much customer funds they hold and for whom. Each custodial bank receives a detailed daily file with each customer’s unique ID number and account balances. This enables custodial banks to perform daily reconciliations, which ensures they have accurate records of which funds belong to which customers at the end of each business day. Additionally, custodial banks receive either online access or statements from each Product Bank where they hold custodial funds, allowing them to independently confirm that the balances in the Product Bank’s core systems match those in the daily file on the custodial banks’ systems. These multiple layers of reconciliation not only ensure that the Custodial and Product Banks on the Raisin platform have the necessary information on deposits, but also validate the integrity of that information.