The Consumer Financial Protection Bureau (CFPB) announced that it filed a complaint against a banking-as-a-service platform on August 21, 2025 in the U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division. The complaint alleges that the California-based company violated the Consumer Financial Protection Act by failing to maintain adequate records of consumers’ funds and to match its records with those of the platform’s banking partners after it filed for Chapter 11 bankruptcy in May of 2024 resulting in in a shortfall of between $60 and $90 million for the platform’s banking partners. The CFPB alleges that as a result of this shortfall, consumers were unable to access their money “for weeks or months” while the platform’s partner banks reconciled their records against the platform’s, and states that “many consumers have not received the full amount of their account balance.” The CFPB and the banking-as-a-service platform entered into a Stipulated Final Judgment and Order, that, if enacted, would enjoin the platform against participating in or assisting others in transmitting funds or acting as a custodian of funds. The Stipulated Final Judgment and Order would also impose a $1 civil penalty.
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