Good morning. For months now, thousands of consumers have been unable to access money they thought was safely deposited at banks.

They are victims of the bankruptcy of a little-known venture-backed startup called Synapse Financial Technologies, whose shutdown is harming not only consumers, but also the fintech startups that worked with it as well as the broader sector.

The bankruptcy is bringing additional regulatory scrutiny to fintech, demonstrating risks for consumers who deposit money via nonbank financial services providers, and creating uncertainty for fintech venture investors and entrepreneurs.

• What is Synapse? Synapse Financial Technologies is a San Francisco company that served as a middleman between fintech startups and licensed banks. Its fintech clients marketed financial products and got consumers to sign up. Synapse sent consumer money to partner banks where it was deposited.
   
• Why are consumers upset? Starting in May, banks including Evolve Bank & Trust and Lineage Bank froze access to accounts associated with Synapse, citing discrepancies in ledgers kept by Synapse. The banks said they don’t know who is owed what. There is a dispute between the banks and Sankaet Pathak, founder and former chief executive of Synapse, about who is responsible for ledger irregularities.
   
• A ripple effect. “We cannot serve our customers without the ability to transfer their funds, so our business has ground to a halt,” said Nick Sky, chief executive of Changed, one of the Synapse creditors. Numerous fintech startups that worked with Synapse are in similar straits.
   
• Regulator's response? Federal Deposit Insurance Corp. insurance kicks in when a bank fails. In the Synapse case, none of the banks has failed. In a July 2 letter to the Synapse estate trustee, a representative for the FDIC said the agency is “strongly encouraging the banks involved in this matter” to address consumer harm caused by the Synapse bankruptcy.

Former bankruptcy judge under criminal investigation over relationship with lawyer.

The Justice Department has opened a criminal investigation into former U.S. Bankruptcy Judge David R. Jones over his romantic relationship with a Houston lawyer who worked on chapter 11 cases before him, according to people familiar with the matter.

Jones resigned from the Houston bankruptcy court last October after his relationship with the lawyer, Elizabeth Freeman, became public and the federal appeals court that appointed him to the bench found probable cause that he committed misconduct.

• Miner Rio Tinto said it has got the approvals it needs for a huge iron-ore mine it is building in Africa, as it reported a rise in second-quarter shipments of the steel ingredient from its operations in Australia.
   
• The Internal Revenue Service has now made it easier to take a limited amount of money out of a traditional retirement account penalty-free.
   
• The heavy hand of China’s government is threatening to hobble its AI ambitions as Beijing puts its companies through a rigorous regulatory regime to ensure they adhere to the country’s tight restrictions on political speech.

Rest of world watches U.S. turmoil with growing alarm.

The attempted assassination of Donald Trump, coming so soon after President Biden’s stumbles during the recent presidential debate, is reinforcing an impression outside the U.S. that the world’s pre-eminent superpower is entering an unusually turbulent and unpredictable period, prompting allies to question its reliability and foes to gloat.

The images of a bloodied Trump being rushed from the stage captured global attention, and for many painted a picture of an America increasingly at odds with itself—a country that has a strong economy but a dysfunctional and dangerously divided political landscape.

• Related: Mystery Around Trump Shooter Deepens

• Federal Reserve Chair Jerome Powell declined to change expectations Monday that the central bank would hold interest rates steady at its meeting in two weeks as officials look ahead toward potential rate cuts after that.
   
• The U.S. fiscal outlook is deteriorating. Wall Street doesn’t seem bothered.
   
• The U.S. and Europe would love to cut their dependence on China for rare earths. Standing in the way of that ambition are low prices and Beijing’s willingness to throw its weight around to keep the market down.

Internal Disney communications leaked online after hack.

Data from Disney’s internal Slack workplace collaboration system have been leaked online, including discussions about ad campaigns, studio technology and interview candidates, according to files viewed by The Wall Street Journal.

An anonymous hacking group that calls itself Nullbulge said in a blog post that it published data from thousands of Slack channels at the entertainment company, including computer code and details about unreleased projects.

• Rite Aid customer data was accessed in a June cybersecurity breach after an unknown third-party impersonated a company employee, the drugstore operator disclosed Monday.

• A judge on Monday dismissed the federal prosecution alleging former President Donald Trump illegally retained classified documents and impeded efforts to get them back, ruling special counsel Jack Smith wasn’t lawfully appointed to bring the case.
   
• Goldman Sachs posted a 21% increase in investment-banking revenue in the second quarter from a year ago, joining a slew of other big banks with double-digit gains as dealmaking on Wall Street accelerated.
   
• Tenant evictions look stuck at elevated levels in several corners of the U.S., showing little sign of returning to what was typical before the pandemic.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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