Fed filed a suit against Farmington State Bank and its holding company FBH Corporation. The entity, also known as Moonstone Bank, received financing and conducted business with Alameda Research.
In 2022, Sam Bankman-Fried’s trading firm invested $11.5 million, taking an unnamed minority stake in the institution.
After investments from Alameda Research, the organization pivoted to new lines of business, including digital assets. The Fed said Moonstone Bank made changes to its business plan without proper notice to banking regulators and without obtaining prior approval.
In January 2023 the entity announced a halt to developing new lines of business; in May it agreed to voluntarily sell its portfolio of loans and deposits to Bank of Eastern Oregon, according to Bloomberg.
“The action ensures that the bank’s operations will be wound down in a manner that protects depositors and the Federal Deposit Insurance Corporation. The action also prohibits Farmington and FBH from paying dividends or distributing capital, spending cash assets and engaging in certain activities without the approval of the supervisory authorities”, — according to the statement.
As noted in the FDIC’s annual report, crypto-asset activities may pose new and complex risks to the U.S. banking system, which are difficult to fully assess.
Earlier, the Fed, FDIC and OCC reminded U.S. banking institutions of potential risks arising from cryptocurrency service providers.