FTX Ties to Farmington State Bank in US Are Probed

One of the assets that have come to light during the bankruptcy of FTX is reportedly a stake in a U.S.-licensed bank, which it owns through a subsidiary.

Farmington State Bank in the state of Washington — which now goes by the name Moonstone Bank online — became tied to FTX in March when the crypto exchange’s sister company Alameda Research invested $11.5 million in FBH, the bank’s parent company, The New York Times reported Wednesday (Nov. 23).

“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the FDIC [Federal Deposit Insurance Corporation], state regulators and the Federal Reserve,” Calvert Advisors President and CEO Camden Fine, a bank industry consultant, said in the report. “It’s just astonishing that all of this got approved.”

Federal regulators would have needed to approve FTX buying a stake in a U.S.-licensed bank, and experts said it’s unlikely that they would have knowingly done so, according to the report.

Farmington State Bank has one branch and $84 million in deposits, $71 million of which is in four accounts. Before the acquisition, the bank’s deposits had been around $10 million for a decade, the report said.

The report comes a day after FTX’s first day in court in which James Bromley, co-head of law firm Sullivan & Cromwell’s Global Finance and Restructuring practice, who is acting counsel to FTX’s newly installed leadership team, called the crypto exchange’s bankruptcy case “unprecedented” in his opening remarks.

“We have probably witnessed one of the most abrupt and difficult corporate collapses in the history of corporate America,” he went on to say, as reported by Bloomberg.