California’s Department of Financial Protection and Innovation (DFPI) has ordered San Francisco-based Yotta Technologies to pay a $1m penalty after finding the company systematically misled customers about the safety of their funds.
The DFPI found that Yotta had told customers their deposits were protected by the Federal Deposit Insurance Corporation (FDIC) while concealing that accounts had been transferred to Synapse Brokerage LLC — a firm that carried no such protection. When Synapse filed for Chapter 11 bankruptcy in April 2024, thousands of consumers lost access to their money and later discovered their FDIC insurance claims were invalid because the coverage Yotta had advertised never existed.
According to the regulator’s investigation, the misleading marketing began as far back as May 2020 and affected around 18,000 California customers. Yotta, which offered a savings product tied to sweepstakes games and prizes, repeatedly told customers their deposits were “safe,” “FDIC insured” and that they “can’t lose” their money. In October 2023 the company moved those customer accounts to Synapse — despite reportedly having serious reservations about the firm — before Synapse collapsed just months later.
Under the terms of a consent order, Yotta must cease all deceptive marketing practices, including any representations that customer cash deposits are fully protected against loss. The company must also identify a dedicated consumer contact point for 120 days from the order’s effective date, and notify all California customers who held a positive balance as of 17 May 2024 about how they may seek financial relief through the Consumer Financial Protection Bureau’s (CFPB) Civil Penalty Fund, which was established in 2025 to compensate those harmed by the Synapse bankruptcy.
The penalty is also intended to discourage other companies from making similar false claims, which constitute violations of the California Consumer Financial Protection Law (CCFPL). The DFPI had previously taken swift enforcement action following the Synapse collapse — becoming the first regulator in the US to act, revoking Synapse Credit LLC’s finance lending licence in July 2024 and subsequently cancelling Synapse Brokerage LLC’s broker-dealer certificate.
DFPI commissioner KC Mohseni said, “Yotta blatantly deceived thousands of California customers regarding the risk to their accounts. It enticed customers to use its financial products and services under false pretenses, ultimately resulting in millions of dollars in lost funds. California will not tolerate these kinds of fraudulent practices and will hold those who flout our laws accountable.”
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