Farmington Bank Faces Fed Wrath: Alameda-Backed Financial Institution Ordered to Shutdown

In a press release launched August 17, 2023, Farmington State Bank, with an funding from Sam Bankman-Fried’s Alameda Research, consented to a stop and desist order from the U.S. Federal Reserve. Alameda invested $11.5 million into the financial institution’s coffers in January 2022. Government seizure paperwork from January 2023 point out Bankman-Fried reportedly had $50 million stashed within the financial institution.

Fed Puts Brakes on Alameda-Funded Farmington: Another Bank Bites the Dust

Farmington State Bank (Moonstone Bank) is complying with the U.S. central financial institution’s cease and desist order signed July 18, 2023. The Federal Reserve Board and Washington State Department of Financial Institutions (WDFI) issued the order towards Farmington State Bank of Farmington, Washington, and its holding firm, FBH Corporation of Baltimore, Maryland.

The regulators decided Farmington violated commitments to regulators by partaking in digital asset actions, comparable to stablecoin issuance, with out obligatory approvals. Farmington allegedly agreed to construct infrastructure to facilitate a third-party’s stablecoin issuance in change for charges, started implementation and altered its enterprise mannequin with out regulatory approval.

The order mandates Farmington stop unauthorized actions, halt dividends, preserve property and keep away from additional actions with out written consent. The financial institution additionally agreed to promote all loans and deposits and terminate operations. Farmington’s August 17 press release confirmed adherence to the Federal Reserve and WDFI order. Alameda Research funded the financial institution in January 2022.

Following the FTX and Alameda downfall, the financial institution acknowledged Alameda’s $11.5 million funding, describing the quantitative buying and selling agency as a “passive investor.” In January 2023, federal prosecutors revealed the seizure of $697 million in property from Bankman-Fried. While the bulk ($526 million) consisted of 56 million Robinhood shares, $50 million was purportedly taken from Farmington, also called Moonstone Bank.

Prosecutors famous on the time that it was believed the confiscated funds have been misallocated FTX buyer property. Farmington is amongst quite a few banks forced to wind down operations this 12 months, curiously related to FTX, Alameda, and Bankman-Fried in varied capacities.

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