Flipcause users complained, a federal lawsuit had been filed, and California issued an order to cease operations, but it was a warning from the payment card giant Mastercard that led the donation platform to bankruptcy court.
The warning from Mastercard was to Stripe, the company that for 12 years had processed payments made on Flipcause’s donation platform, according to federal bankruptcy court filings.
Joe Namath Foundation complains about Flipcause to Mastercard
In an initial violation letter to Stripe on Oct. 24, Mastercard warned that Flipcause might not be transferring funds to nonprofits.
The Joe Namath Foundation, a New York-based charity that supports neurological research and children, had complained to Mastercard that Flipcause did not make timely payments of donations.
Mastercard asked Stripe about Flipcause payments to the foundation and five other organizations, including San Francisco’s Millenium School, the Central Coast’s 805 Undocufund, and Richmond-based Social Good Fund.
The letter warned that Mastercard could assess fines on Stripe of $190,000 due to Flipcause’s conduct. Flipcause was not registered as a payment facilitator.
In December, Stripe froze Flipcause’s account. The refusal to transfer payments, sent the company into a spiral that ended in Chapter 11 bankruptcy court.
On Dec. 22, Flipcause asked a federal bankruptcy judge to compel Stripe to release money the processor is currently holding. An objection to that demand filed by Stripe on Dec. 29 provides an in-depth account of how Flipcause handled the millions of dollars donated to nonprofits through its platform.
A donation to charity or payment to Flipcause?
Stripe’s investigation “identified indications of payments going directly to the Flipcause platform and not to the charity’s accounts as intended by donors,” court filings explain.
“Supporter payments are made to Flipcause as the ‘merchant counterparty,’ and Flipcause owns the funds upon receipt,” Flipcause CEO Sean Wheeler told Stripe in an email in the filing.
At Flipcause’s Dec. 22 bankruptcy hearing, Flipcause Executive Chairman Emerson Ravyn testified that donations sent to charities through Flipcause belonged to the platform, not the nonprofits.
U.S. Bankruptcy Judge Thomas Horan asked Ravyn, “So if someone makes a donation to a charity through a website where Flipcause is providing services, is it your position that the person is not actually making a donation to the charity, but they’re making a payment to Flipcause?”
“Yes, that’s correct,” Ravyn responded.
Stripe told the court it found, “Flipcause was improperly acting as a payment aggregator and engaged in crowdfunding in violation of Stripe’s aggregation policy.”
Flipcause was accepting money from multiple businesses, but was not authorized to act as a payment facilitator, this violated both Stripe and Mastercard rules, Stripe wrote.
Flipcause, according to Stripe, lacked the proper registrations to run this complex payment operation.
Stripe concerned with Flipcause’s noncompliance with cease and desist order
On Nov. 12, the California attorney general’s office demanded Flipcause stop operations and provide a complete accounting of its charitable assets and activities for the last decade.
Stripe contacted Wheeler on Nov. 21 asking about the company’s plans to comply. Stripe said it would need to review whether it would continue to support Flipcause.
On Nov. 24, Wheeler told Stripe that Flipcause would continue operating while it appealed the order.
“Flipcause informed Stripe that it intended to appeal the Cease and Desist Order but indicated that it would continue to operate, in apparent violation of the Cease and Desist Order, while the Cease and Desist Order was being challenged,” Stripe said in the filing.
On Dec. 2, Stripe requested detailed information about Flipcause’s payments to the Joe Namath Foundation.
Concerned with the state order, the company also demanded that Flipcause stop using Stripe’s services in California, unless it was to make payments to nonprofits. Stripe added that Flipcause would also need to implement compliant funding transfers, fees for charges, overhaul its terms of service to reflect its intent to act as a merchant of record.
All of this needed to be completed by the next day.
Wheeler responded on Dec. 3 with the requested documentation of electronic transfers and screenshots of deposits to the foundation.
Stripe fines and investigates Flipcause
Stripe also imposed fees and new compliance demands.
Stripe also warned that noncompliance could lead to fines up to $500,000, and monthly recurring noncompliance fees of at least $25,000.
Stripe also levied a $15,000 non-response fee.
“Additionally, we have encountered resistance from Flipcause regarding their classification as a Merchant of Record (MOR) without an appropriate supporting integration,” Stripe wrote.
On Dec. 3, Stripe acknowledged Wheeler’s email, but noted the company would escalate its investigation. That morning, Stripe received “additional notifications from our financial partners concerning serious matters related to your account.”
The in-depth review would determine if Stripe would continue working with Flipcause.
Flipcause asks Stripe not to freeze account
Stripe also froze Flipcause’s account until Feb. 28, 2026.
“This reserve was put in place to protect against potential disputes and chargebacks arising from the elevated risk level associated with your business,” the Stripe team wrote. “Credit will continue to monitor processing behavior and reassess the release date.”
Wheeler appealed to Stripe not to freeze Flipcause’s funds. He said the company was cooperating and not “resistant.”
For 12 years, Wheeler wrote, Flipcause processed $740 million through Stripe, and paid $16 million in fees to payment processors under “this approved model.”
“Given this long history and reliance, abrupt operational restrictions, such as the recent reserve and payout holds, have an immediate and material impact on our ability to continue meeting obligations and serving customers,” Wheeler wrote. “A 100% reserve is not sustainable for any platform of our scale, and even a prolonged 50% reserve would significantly impair our ability to meet core obligations and maintain continuity for our customers.”
Stripe cuts off Flipcause
Stripe terminated services to Flipcause on Dec. 4.
The company was “too high a risk.”
The pressure from Mastercard and improper aggregation, along with the attorney general’s order and mounting consumer and legal complaints about Flipcause, led Stripe to initiate the “offboarding process.”
“After careful consideration, which included a review of financial partner demands, ongoing regulatory enforcement action, patterns in consumer feedback and Stripe’s Aggregation policy, we have determined that your business currently presents a higher level of risk than we are able to manage in our operations,” Stripe wrote. “Given the multiple demands from financial partners sharing similar concerns, we are unable to continue supporting your business.”
‘Stripe has abruptly discontinued support’
Flipcause notified users on Dec. 6 about Stripe’s decision to cut off services to the platform.
“We want to inform you of an unexpected development that will affect your ability to collect online payments through Flipcause,” read the message posted to Flipcause’s dashboard and reviewed by Oakland Voices. “As of 12/6/2025, our payment processing partner, Stripe, has abruptly discontinued support for processing new online transactions. This decision was made by Stripe with minimal notice to us, and it impacts all future payments processed through the Flipcause platform.”
Flipcause encouraged users to explore alternate payment processors, but added that the platform would support users who wished to unsubscribe and to transition from the platform.
“If you decide to fully transition away from the Flipcause platform and website services, any unused portion of your subscription will be refunded to your account upon completion of that transition,” Flipcause wrote. “Additionally, any pending balances within your Flipcause account will be reconciled in the coming weeks.”
Mastercard fines Stripe $137,500
All transactions ceased on Dec. 7, according to Stripe.
On Dec. 11, Mastercard fined Stripe $137,500 for Flipcause’s noncompliance. Stripe paid the fine.
“The Debtor’s business practices have already subjected Stripe to one substantial fine based on its activity, and it appears that Stripe may be subject to additional fines from other financial partners in the near term,” Stripe’s attorney Aaron Applebaum wrote in the filing.
Flipcause files for bankruptcy
Two weeks after Stripe cut off services to Flipcause, the company filed for Chapter 11 bankruptcy in Delaware.
Documents filed on Dec. 19 revealed that Flipcause owed $30 million to creditors, including more than $29 million to over 3,200 nonprofits nationwide.
The company had just $70,000 left, held in a single Citibank account.
Flipcause also paid $3.8 million to executives and their family members in the 90 days before filing for bankruptcy.
Flipcause’s bankruptcy lawyer filed a motion asking the court to compel Stripe release the reserve. Bankruptcy attorney Ronald S. Gellert asked the court to release $50,000 for the Flipcause to operate three weeks into 2026.
On Dec. 22, Judge Horan refused to hear the motion due to a lack of notice.
If Flipcause needed cash, Horan suggested to the company, “Go out and get unsecured debt.”
Stripe: Flipcause’s accounting shouldn’t be trusted
In Stripe’s 13-page objection, the company opposed Flipcause’s request to release an estimated $790,000 in funds. In bankruptcy filings, Flipcause lists the amount at $1.45 million.
Stripe argues that it terminated Flipcause’s contract before the bankruptcy, so it couldn’t be “resurrected.”
Stripe added that it faces up to $6 million in potential chargebacks and fines. Flipcause’s reserve, less than $1 million, won’t cover the Stripe’s exposure.
Stripe also noted discrepancies in Flipcause’s estimates of how much of the frozen funds belong to charities.
“Stripe does not believe that the Debtor’s internal accounting should be trusted on this, however,” Stripe wrote, “and that a complete third-party accounting should be undertaken before any money is dispensed, to ensure that no money belonging to third-party charities is wrongly transferred to and spent by the Debtor.”
A hearing on Stripe’s objection is scheduled to be held on Feb. 4.
Flipcause still owes the Joe Namath Foundation
As for the organizations that Mastercard mentioned to Stripe, Flipcause owes $352,500.90 to 805 Undocufund, $142,660.70 to projects fiscally-sponsored by the Social Good Fund, and $54,368.20 to the Millenium School.
The foundation named after “Broadway Joe” that complained to Mastercard did not respond to a request for comment from Oakland Voices. It’s not clear how much Flipcause owed the organization and for how long. Bankruptcy records show Flipcause still owes the Joe Namath Foundation 68 cents.
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