Moonstone Bank Now Confirms FTX’s Account

Moonstone Bank, formerly Farmington State Bank, has been forced to confirm the existence of an account in their ledgers held by the now-bankrupt crypto exchange FTX.

This follows after the bank’s chief digital officer Janvier Chalopin relayed that the $11.5 million infused by FTX’s sister hedge fund Alameda Research was a “seed funding… to execute [their] new plan of being a tech focused bank.”

The investment, valuing the bank with $10 million in customer deposits at $115 million, is currently in limbo now that Alameda and FTX have gone bankrupt.

New developments, however, pushed Moonstone to confirm that FTX was an account holder at the bank, quickly assuring that it has “more than sufficient liquidity… to cover the deposit.”

“In light of the Bahamian Joint Provisional Liquidator motion filed on December 23, 2022, with the Delaware Bankruptcy Court, which makes public the existence of a certain FTX account held by the Bank, we wish to re-assert that we have followed safe and sound banking practices and kept our balance sheet highly liquid,” the bank said in a statement.

Moonstone added that as soon as the FTX implosion began, it placed the exchange’s bank account on hold, “in light of competing claims and an attempt by potentially unauthorized persons to withdraw the funds.” Since then, the bank is in coordination with both the FTX debtor-in-possession and the Bahamian Joint Provisional Liquidator.

Like what the bank said about the “seed fund,” they would await the bankruptcy court’s decision on where to transfer the FTX deposit.

“Our sole concern has been to have a clear direction on who, the FTX debtor-in-possession or the Bahamian Joint Provisional Liquidator, is entitled to the deposit, because we cannot be put in a position to pay the deposit back twice,” the bank added.

In March, FTX’s sister hedge fun Alameda Research spent $11.5 million on Farmington State Bank’s parent company, FBH. According to the Federal Deposit Insurance Corporation, the bank’s net worth was $5.7 million; it was the 26th-smallest bank in the country out of 4,800 at the time of the investment.

But it is not only the peculiar stake that raised some questions. Back in 2020, Farmington State Bank was acquired by FBH whose chairman was Jean Chalopin. He is also the chairman of Deltec Bank, which, like FTX, is based in the Bahamas–but its most well-known client is a $65-billion crypto firm called Tether.

It’s unclear how FTX–based in Bahamas–was permitted to acquire a stake in a US-licensed bank, which would require approval from federal regulators. Banking professionals say it’s difficult to believe authorities would have knowingly permitted FTX to take control of a US bank.

Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply