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Comment by adrr | Hacker News Reader

They were doing ACH pulls which can be clawed back for 60 days. More than likely they were hit by fraud and the custodian bank was making the decisions to hold the money to mitigate their loss. Beam isn’t holding anyone’s money, there is a bank that sets all all rules and takes all the risk.

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I hear you, but shouldn't they be capitalized well enough so these known holds wouldn't prevent customers from withdrawing their funds?

If the only thing that happens is that the business disappears , with depositors fully recouped, id still say that's not good enough.

Handling ACH fraud is tricky. There is no decent dispute resolution mechanism in ACH compared to what Visa/MC offer for cards. So FinTechs and their backing bank are on the hook for customer reversals for up to 60 days. In the new FinTech revolution, this is one of the most misunderstood things. Many FinTech entrepreneurs think they can put up a nice UI and offer great interest rates only to get hit by huge fraud losses as soon as they launch. I run a fraud prevention startup for FinTechs - sardine.ai - and I hear of a new FinTech hit by fraud every week.

There’s no scenario that Beam failing would risk the depositors losing money. Money is held in a FDIC insured bank account under the customers name. Beam is just a pretty interface on top of the bank account.

The holds are the same types of holds that you see at regular banks. Issue is that Beam explicitly made a claim that it only takes a few days to transfer out and falsely advertised an interest rate. Interest false statement is interesting because the underlying bank violated their bank charter if Beam put out false interest rate marketing materials and could be subject to fines.

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