- The Fed issued an enforcement action order against Farmington State Bank.
- In 2022, the counterparty began conducting cryptocurrency transactions without notifying authorities.
- Then Alameda Research bought an $11.5 million stake in the organization.
The U.S. Federal Reserve (Fed) published an enforcement action order against Farmington State Bank (formerly Moonstone Bank).
The regulator said the counterparty improperly changed its business vector. The Fed alleges that the bank and its holding company, FBH Corporation, violated federal law.
In 2022, the organization was involved in digital asset turnover activities and facilitated the issuance of stablecoins without approval.
This comes after Alameda Research, which is part of FTX Group, acquired a stake in the bank for $11.5 million, American Banker notes.
After the bankruptcy of the exchange, Farmington State Bank announced that it plans to distance itself from the cryptoasset sector. Management cited changes in the regulatory climate as the reason.
FBFH Corporation is owned by Jean Jacques Pierre Chalopin, the publication noted. He is also chairman of Deltec Bank, which works closely with Tether, emphasized here.
In the winter of 2023, the bank entered into an agreement to sell to a larger counterparty, Bank of Eastern Oregon.
The Fed’s order states that Farmington State Bank should wind down all operating activities other than those aimed at preparing the transaction.
“The [Fed] Board’s actions ensure that the liquidation proceeds in a manner that protects the bank’s depositors and the Deposit Insurance Fund.
This action also prohibits Farmington and FBH from paying dividends or making capital distributions, dissipating cash assets, and engaging in certain activities without the approval of their principals,” the regulator’s order stated.
Reminder, earlier the Federal Deposit Insurance Corporation of the United States published a report on risks in the financial segment of the. The regulator included cryptocurrencies.