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.

Per the article, FDIC insurance doesn't cover this because it's a 'neo-bank' and the underlying bank didn't fail.

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?).

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.