LendUp Global is liquidating its assets, including Ahead Financials, a neobank with thousands of customers, under an assignment for the benefit of creditors.

Liquidation is the nail in the coffin for LendUp, which was ordered to cease lending operations by the CFPB in December after allegedly misleading and deceiving customers with “illegal and deceptive marketing.”

• At the time, however, LendUp told Protocol that Ahead Financials would continue operations.
• Another neobank, Kinly, has reportedly acquired some of Ahead’s customers, though some of them have taken to social media and app stores with complaints that they cannot transfer funds.

LendUp’s collapse is just the latest in the fall of several neobanks. Others are tumbling because the money’s drying up, Protocol Fintech reporter Ryan Deffenbaugh told me.

• Though VC firms infused fintech companies with billions last year, that’s slowed considerably: Banking-focused fintech startups raised just $1.9 billion during the quarter, an almost 80% year-over-year drop.
• And making money has proven to be difficult for these banks: Just 5% of around 400 global neobanks reached a break-even point, according to a May report.
• Varo recently laid off 75 employees, or 10% of its staff. And Chime, the largest U.S. neobank by account size, halted its IPO plans earlier this year, but it hasn’t imposed layoffs yet.

LendUp’s fall appeared to be driven by regulatory scrutiny, which has also been heating up in the industry with the CFPB’s renewed focus on nonbanks including fintechs, Ryan said. Though neobanks say that they provide an alternative to traditional banks that saddle low-income customers with onerous fees, regulators aren’t convinced they’re better than the institutions they want to replace.