Mercury Reconciliation Issues

5 min readMay 9, 2024

Mercury has been claiming to their customer base for months that they are “fully reconciled” and completely off Synapse services. Evolve’s own investigation suggests that both of these statements are incorrect.

Our hope with open sourcing this information is that there will be a public outcry (at least from our customers) that will motivate Evolve and/or Mercury to swiftly resolve this issue instead of hoping that this problem would go away.

This resolution is material to Synapse and our ability to be able to close the TabaPay transaction. Our understanding is that Taba would finish the acquisition if Evolve met their closing condition of funding their accounts — which evolve has not yet done.

TL;DR

It’s important to note that all the analysis below is the work product Evolve shared with us, no data has been altered or edited. Including the screenshots — those are from Evolve as well. And since then, we have not been given any more information on this issue.

Here is the timeline of events:

09/28–10/10/2023: Mercury purports to migrate off Synapse services between 09/28–10/10. During that period the data suggests that they moved at least $31,920,151.62 more in end-user balances than they should have from Evolve FBO accounts.
10/9/2023: Mercury made statements publicly stating that they were completely off Synapse services and “fully reconciled.” We have questioned what “reconciliation” Mercury actually performed.
How can you be fully reconciled if the data suggests that you have moved more money than you should have? That rather indicates that you do not have proper reconciliation procedures in place.

Continued Utilization until well into 2024: Mercury continued to utilize Synapse services and program accounts at Evolve after representing to the public that their “migration is complete.”
On March 06 2024: We notified Mercury of this issue. And since then have made very little progress in getting Mercury to remediate these issues.
March 22 2024: After several requests from Synapse for a remediation led to a tri-party call between Synapse, Evolve and Mercury that seemed more confrontational than cooperative, compounded by a stated unwillingness to expedite resolution over the weekend by Mercury— a contrast to Synapse and Evolve’s readiness to address the issue promptly.
March 22 2024: On the same day, their CEO made statements about intentionally delaying the process.
March 22 2024: Which was followed by a notice of appeal of the denial of Mercury’s TPO attempts (filed the same day as our meeting).
Since March 22 2024: Evolve told Synapse that it was working to recover Synapse end-user funds from the Mercury program and agreeing to a settlement agreement with Synapse to fully fund their FBO accounts.
Until 6:30 pm CT on May 8, 2024, the night before Synapse’s hearing on it’s motion for the court to approve the sale order to Tabapay, Evolve communicated that it would be funding its FBO accounts as required by the parties’ settlement agreement, but it continued to request extensions to resolve the issue with Mercury and to obtain Mercury’s buy-in.
May 08 2024: Evolve has amnesia about their own findings regarding the Mercury over-migration and their debit from end-user funds for their own fees which Synapse believes totals at least $27 million and now claims that the GLs are fully funded — which Synapse and others obviously disagree with.

Here are the findings

Based on the work done by Evolve, Evolve identified that Mercury moved more funds ($49,623,829.47 more) than they should have while migrating away from the Synapse ecosystem into their new GL with Evolve. That is the last correspondence from Evolve regarding their investigation

Side Note: GL means a General Ledger account — banks create a GL for their fintech customers where all of the customer deposits sourced through that fintech sit.

To set the context, Synapse was not notified of Mercury’s migration plans until a few days before Mercury transitioned. Synapse had no involvement in their planning or oversight on their execution.

This investigation suggests that Mercury’s migration plans and execution failed to observe minimal standards of quality — ignoring any cash balance reconciliation against Evolve’s ledger.

These issues happened in two waves based on the investigation.

Waive 1 — During Migration

During the migration process, the data suggests that Mercury moved $31,920,151.62 more than they should have.

Side Note: As a matter of coincidence, this sum is very close to the number Mercury made a demand for in their legal letter to Synapse, which was $31,514,080.73.

Here is the accounting of the issue:

Waive 2 — After Migration

After the migration was complete — and Mercury’s public statements about being “fully reconciled” and being off Synapse’s services, the data suggests that Mercury continued to use Synapse and the Synapse Program GLs and in this wave overdrew by $17,703,677.85. Here is the accounting of what activity occurred in that period:

Methodology used for analysis

To set context, Mercury had a dedicated GL with Evolve within the Synapse program. So as a part of this analysis Evolve and Synapse reviewed the transactions that occurred on the Mercury GL with the assumption that at the end of the migration process, the aggregate mercury balances with Synapse would be at $0.00 (an assumption confirmed by Mercury).

So, the analysis zeroes in on Mercury’s GL activity and migration processes. Here’s the breakdown:

During Migration (09/28 to 10/10)

Initial Aggregate Balances (before migration): $3,236,644,253.55. This is the balance of Mercury users right before the migration began.
Activity Adjustments: Then from this balance we adjusted for all the business as usual activity that occurred in the mercury user accounts. So activities like card usage, ACH, wires, etc. Accounting for this, led to an expected balance of $3,119,566,909.08 for Mercury to migrate.
Actual Migration by Mercury: But when we look at the GL activity during this timeframe, In aggregate, Mercury migrated $31,920,151.62 more out of their Synapse Program GL than they should have.

Post Migration (10/11 to 10/31)

The period after migration should have seen no further transaction activity on the Synapse/Mercury GL — Mercury represented to the public that it had fully migrated, was no longer using Synapse services, and was “fully reconciled.” Regardless, since the user balances should have gone down to $0 after the migration was complete, any balance adjustments should be net-zero — aka as many debits as credits. Instead, mercury did more debits without corresponding credits.
Total Debits vs. Credits: For the 2nd half of our analysis, we looked at all the credits coming into the GL and all the debits going on. One — we are still not sure why there would be any activity in the mercury GL after the migration has occurred, but even if there is activity, our understanding is that the funds leaving the GL and going into Mercury’s new GL should equal funds coming into this GL that we are analyzing. But what we find is that there are more debits than credits. Resulting in an additional overdraw of $17,703,677.85.

Cumulative Discrepancy: Totals to $49,623,829.47 overdraw.

Thats all for now.