Beam CEO Yinan Du is the same guy who was CEO of Groupon clone in China, 24quan who's company did not pay wages and debts before it's eventual bankruptcy.<p><a href="https://www.techinasia.com/tag/24quan" rel="nofollow">https://www.techinasia.com/tag/24quan</a><p><a href="https://www.americanbanker.com/news/beam-financial-vanishing-act-a-cautionary-tale-for-partners-of-fintechs" rel="nofollow">https://www.americanbanker.com/news/beam-financial-vanishing...</a><p>Du then goes to Harvard Business School to burnish his reputation and then starts Beam.
The people's deposit money is effectively gone. A few people might be able to find their money in an underlying bank to recover. The hope is the deposit is frozen and in the unwinding it'll be there waiting.<p>Per the article, FDIC insurance doesn't cover this because it's a 'neo-bank' and the underlying bank didn't fail.<p>The problem is how the deposits were used. If they're simply stored, it's easy to unwind, but the real problem is if the deposits were lent out or even used to pay other account's interest rates (which would qualify for a pyramid scheme?).<p>I'm not familiar with the rules regarding a neo bank's access to an underlying deposit in compared to the bank itself, but I wouldn't put it past CEO Du to utilize deposits in the worst way possible.
I love the smell of a Ponzi scheme in the morning...<p>"The FTC also alleged that Beam wasn’t able to give users the high interest rates it said it would give.<p>The FTC first announced in November 2020 a complaint alleging that Beam and its founder Du promised that customers of the free mobile banking app could make transfers out of accounts and users would obtain their requested funds within three to five business days. However, the FTC alleged that some customers waited weeks or months to get their money.<p>"
Direct link to the FTC Press Release: <a href="https://www.ftc.gov/news-events/press-releases/2021/03/mobile-banking-app-settles-ftc-allegations-it-misled-users-about" rel="nofollow">https://www.ftc.gov/news-events/press-releases/2021/03/mobil...</a>
> As per the article, the FTC alleged that some customers waited weeks to get their money back.<p>Now I know that this is bad, but I have seen worse behavior from banks like Wells Fargo. Why is it that those banks just get monetary fines, but this new startup is forced to shut down ?
Brace yourselves for more stories like these.
Recently I got served a youtube add for a dapps (distributed apps) development workshop where the instructor went something like "learn how to create financial apps without any prior experience in just X days/weeks/months!!!".
If crypto and decentralized finance is going to make good on the promise of democratizing finance then we have a bumpy road ahead of us. I'm still optimistic that in the end this will lead to a greater good, but there will be casualties while we work out the kinks.
I just had to file a complaint with the FTC over voyager app. I had deposited cyrpto currency to the correct wallet and they never showed up in the app. Its been 8 days and support wont even get back to me.
The last paragraph goes:<p>> <i>In other recent banktech and wealthtech news, SoFi will offer its users the ability to invest in IPOs for companies going public, the digital lender announced on Friday. Typically, these opportunities are reserved for institutional investors. SoFi expects to offer a couple of IPO securities in the months ahead that will be available for its "SoFi Invest members through the SoFi app."</i><p>Well played SoFi.
Let’s first remove the misconception that it is anywhere near a Ponzi scheme. If it was, the news and Settlement will be mentioning that P work again. No mentions, no conclusive evidence of wrongdoing in the Settlement.<p>Contrary to FTC statement and CNBC reports, the timeline is the following, and Beam had the paper trail to show that this is factual —<p>1) October 1, 2020 - Beam's ACH service provider's API service stopped working. Funds locked in banking service provider.<p>2) Early October - Beam began proactively working with its ACH service provider, banking service provider to unlock the funds help at bank. Service providers initially refused to unlock funds unless Beam indemnifies them. Months long disputes with ACH vendor who locked up the fund.<p>3) November 16 - All of $2.6 million except around 80 customers who Beam was not able to reach had been refunded in full by Beam and Beam's service providers. The remaining amount of these around 80 customers accounted for <$90K in aggregate dollar amount.<p>4) November 18 or about - FTC, knowing that Beam had returned vast majority of the $2.6 million, still filed a lawsuit against Beam. CNBC article came out around the same time misstating that Beam had not yet returned the funds and it was FTC who “made” the fund return happen or to be happened.<p>5) By January - Beam had since then contacted all remaining 80 customers and the return of funds had been complete for all where customers can be reached.<p>FTC admitted explicitly to Beam on an internal call that they have not reviewed all the evidence —and that they WILL NOT review the full evidence proving Beam's innocence—which is against the principle of due diligence and fair justice.<p>Beam offered full review of the facts and full disclosure of all facts and evidence, but FTC refused to examine the facts to rectify false allegations by FTC. This is clear evidence that this case was NEVER about truth-seeking, but a PR chess piece for FTC.<p>About Settlement
1 - There is zero conclusive evidence of finding of wrongdoing. Nil. Only false allegations.
2 - There is $0 penalty. When was the last time you saw FTC taking on an scrappy SME for months, only to come to a $0 settlement? Shows there’s more to the story.<p>To be clear, Beam as a company is not shutting down. Stop the misleading headlines just like when people call Beam a Ponzi scheme. False “entertaining” frivolous news comes and goes, but the damage on good people and startups is a permanent injustice.<p>If the “System” can take down any small, defenseless SME with explicit refusal to review the FACTs, simply sensationalizing a false make-believe story to paint a picture of the “System” being glorious, fired up by fake news, is this the world we want to leave to our children?
Looks like they lost their ACH payments processor back in Dec 2020 leading them to prevent being able to handle ACH returns:
<a href="https://abc7news.com/beam-financial-app-ftc-lawsuit-fintech/8504506/" rel="nofollow">https://abc7news.com/beam-financial-app-ftc-lawsuit-fintech/...</a>