Moonstone Bank, the Washington state bank with ties to FTX, to cease crypto operations – GeekWire

Moonstone Bank, the Washington state bank with ties to FTX, to cease crypto operations – GeekWire

Moonstone Bank, the Washington state bank with ties to FTX, to cease crypto operations – GeekWire

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Moonstone Bank, the FTX-linked digital lender, announced this week that it will end plans to offer banking services for sectors such as cryptocurrency and cannabis.

The move is a sudden pivot from the company’s original ambitions to transform the century-old Farmington State Bank, a small lender near the Washington-Idaho border, into a technology-focused finance company.

“The change in strategy reflects the impact of recent events on the crypto industry and the resulting change in the regulatory environment related to crypto business,” Moonstone said in a press release.

After shutting down its cryptocurrency and cannabis services, Moonstone will change its name back to Farmington State Bank, returning to its roots as a “community bank,” according to the release.

Farmington has its origins in the small town of Farmington, Washington. The lender, founded in 1887, previously provided loans with a focus on agriculture.

It was acquired in 2020 by FBH Corporation, owned by Jean Chalopin, also chairman of Bahamas-based Deltec Bank. Deltec’s best-known client is cryptocurrency company Tether.

The New York Times reported Nov. 23 that FBH, parent company of Farmington State Bank, received $11.5 million in venture capital funding in March from Alameda Research, the commercial firm whose financial difficulties were cited as a factor- key to the end of FTX. The rapid collapse of FTX in November caused a contagion in the cryptocurrency industry.

By acquiring Farmington, Moonstone received a banking license, a business license required of US financial institutions that handle deposits and offer other banking-like services. Moonstone previously described itself as a “chartered digital bank”.

Banking experts previously told GeekWire that bank takeovers require a significant amount of due diligence from regulators. Given that Moonstone was partially owned offshore and involved in crypto, the deal should have raised more regulatory flags, they said.

Before starting to raise capital to transform itself into a technology-focused bank, Farmington had just three employees and was the 26th smallest bank in the US out of 4,800, reported The New York Times. His net worth was $5.7 million, according to the Federal Deposit Insurance Corporation, and he didn’t offer online banking or credit cards.

The Times reported that in the third quarter of this year, the bank’s deposits grew by nearly 600% to $84 million. Most of the increase came from four new accounts, according to the Times.

It was later revealed that Moonstone held nearly $50 million in FTX deposits, Forbes reported.

In December, Senator Elizabeth Warren (D-Mass.) and Senator Tina Smith (D-Minn.) pressed U.S. banking regulators to investigate ties between the banking industry and cryptocurrency companies, including Moonstone.

In January, Joseph Vincent quietly stepped down as Moonstone’s chief legal officer. Vincent joined Moonstone in May and left in December, according to his LinkedIn profile and as reported by Protos. Previously, he was director of legal and regulatory affairs for the Washington State Department of Financial Institutions and is an adjunct professor of law at Seattle University.

Moonstone is led by CEO Gary Rever, who is a director of Vermont State Bank. Previously, it was led by Ron Oliveira, who stepped down as CEO in August.

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