Simon Ng Certainly! Here’s a paraphrased version of the text:
On August 17, 2023, Farmington State Bank, bolstered by an investment from Sam Bankman-Fried’s Alameda Research, acceded to a cease and desist command from the U.S. Federal Reserve. A January 2022 investment of $11.5 million from Alameda was made, and documents from January 2023 revealed that Bankman-Fried reportedly held $50 million in the bank.
U.S. Central Bank Stops Alameda-Backed Farmington in Its Tracks: Another Financial Institution Falls
Compliance with the cease and desist order from the U.S. Federal Reserve, issued on July 18, 2023, has been confirmed by Farmington State Bank, also known as Moonstone Bank. Both the Federal Reserve Board and Washington State Department of Financial Institutions (WDFI) directed the order at Farmington State Bank in Farmington, Washington, and its parent company, FBH Corporation in Baltimore, Maryland.
The oversight bodies found that Farmington breached pledges to regulators by engaging in unauthorized digital asset undertakings, like the issuance of stablecoins, without obtaining the needed permissions. The bank was accused of agreeing to develop infrastructure for a third party’s stablecoin issuance for fees, initiating the process, and then modifying its business strategy without regulatory consent.
The order obliges Farmington to discontinue unauthorized practices, suspend dividends, safeguard assets, and avoid future actions without explicit written approval. The bank also committed to liquidating all loans and deposits and ending its operations. A press statement on August 17 affirmed Farmington’s compliance with the Federal Reserve and WDFI’s directives. Alameda Research made its investment in the bank in January 2022.
In the wake of setbacks at FTX and Alameda, the bank recognized Alameda’s $11.5 million investment and identified the quantitative trading firm as a “passive investor.” In January 2023, authorities exposed the confiscation of $697 million in assets from Bankman-Fried. While the lion’s share ($526 million) was comprised of 56 million Robinhood shares, $50 million was allegedly seized from Farmington, also referred to as Moonstone Bank.
At that juncture, prosecutors noted suspicions that the seized funds were misappropriated FTX client assets. Farmington joins a series of banks that have had to cease operations this year, with connections oddly traced back to FTX, Alameda, and Bankman-Fried in various ways.
What’s your take on the Federal Reserve’s closure of Farmington State Bank? Feel free to express your insights and viewpoints on this matter in the comments section underneath.
Table Of Contents
Frequently Asked Questions (FAQs) about fokus keyword Farmington Bank
What led to the cease and desist order against Farmington State Bank?
Farmington State Bank was found to have violated commitments to regulators by engaging in digital asset activities, such as stablecoin issuance, without necessary approvals. The Federal Reserve and Washington State Department of Financial Institutions issued the cease and desist order, mandating the bank to cease unauthorized activities and terminate operations.
Who was the primary investor in Farmington State Bank, and how much did they invest?
Alameda Research, led by Sam Bankman-Fried, was the primary investor in Farmington State Bank, and they invested $11.5 million into the bank in January 2022.
Were any assets seized from Farmington State Bank or its associates?
Yes, federal prosecutors revealed the seizure of $697 million in assets from Sam Bankman-Fried in January 2023, including $50 million that was purportedly taken from Farmington, also known as Moonstone Bank.
What were Farmington State Bank’s unauthorized activities?
Farmington State Bank allegedly agreed to build infrastructure to facilitate a third-party’s stablecoin issuance in exchange for fees. They began implementation and altered their business model without regulatory approval.
How does Farmington State Bank’s closure relate to other financial institutions this year?
Farmington is among numerous banks that have been forced to wind down operations this year, with connections to FTX, Alameda, and Bankman-Fried in various capacities, highlighting broader regulatory scrutiny within the industry.
5 comments
This whole situation with Farmington’s closure and Alameda’s downfall is concerning. Shows that even the big names can make serious mistakes
Farmington bank. Never heard of them, but I guess they were big with digital stuff. This is why i stick to traditional banking.
im shocked that Farmington violated regulations like this. Banks need to be more careful, or more will shut down. thoughts?
Wow, didn’t see this coming with Farmington Bank. Alameda’s involvement too? Crazy times in finance
Sam Bankman-Fried seems to be everywhere these days. what’s happening with Alameda, it’s all falling apart