FTX stake in US bank raises concerns about banking loopholes
The bankruptcy proceedings of cryptocurrency exchange FTX have revealed many new aspects of its unethical practices. The latest revelation around its stake in one of the smallest United States banks from rural Washington has raised fresh concerns about its operations and alleged misuse of banking loopholes.
Farmington State Bank in Washington State, now renamed Moonstone, is the 26th smallest bank in the U.S. with a single branch and three employees. FTX invested in the rural bank through its now-bankrupt sister company Alameda with an investment of $11.5 million in its parent company FBH in March 2022. The Alameda investment was more than double the bank’s value of $5.7 million, reported The New York Times.
The FTX’s ownership in Moonstone is seen as a move to bypass the requirements of owning a banking license in the U.S., which according to many, is quite a complex task.
One Reddit user wrote that it takes a lot of work to get a banking license, and thus “buying a small bank is often a back door to getting a license, which would be a natural part of a business plan for something like FTX.”
Another user pointed toward the perceived misuse of banking loopholes and the lack of regulatory oversight on crypto. Others speculated that Sam Bankman-Fried’s political connections could have played a part in the deal as well and said:
Apart from FTX’s stake in a U.S. bank, what drew more attention from the crypto community is the connection between the rural bank’s parent company FBH and another crypto entity, Tether, the largest issuer of a stablecoin in the crypto market currently.
Related: How does the FTX collapse affect Dubai's crypto ecosystem?
The chairman of FBH is Jean Chalopin, who also happens to be the chairman of Deltec
Read more on cointelegraph.com
