The Weird Connection Between FTX and a Tiny Rural Bank

It raises more questions about failed cryptocurrency exchange
By Kate Seamons,  Newser Staff
Posted Nov 24, 2022 11:56 AM CST
The Weird Connection Between FTX and a Tiny Rural Bank
The FTX Arena name is still visible where the Miami Heat basketball team plays Saturday, Nov. 12, 2022, in Miami.   (AP Photo/Marta Lavandier, File)

There is no shortage of questions swirling around the imploded cryptocurrency exchange FTX, but the New York Times raises a particularly unusual one: Why did FTX invest a huge sum in a rural Washington bank so small it didn't even provide online banking? As the paper explains, the revelation actually spurs a whole series of questions (we'll get to those), but first, the nuts and bolts of what is known: Of America's 4,800 banks, the single-branch Farmington State Bank was the nation's 26th smallest bank, with a net worth of $5.7 million and just three employees. In March, FTX's sister firm, Alameda Research, invested $11.5 million—twice the bank's net worth—into FBH, the bank's parent company.

The Times delves into some of the crypto-connections FBH, which acquired the bank in 2020, has. But the fascinating detail is that per FDIC data, Farmington has reliably had about $10 million in deposits, but in Q3, that surged to $84 million, with almost all of the new cash belonging to just four new accounts. A few days before FTX's investment, the name Moonstone Bank was trademarked; that's what Farmington now uses online. Among the unanswered questions: How in the world did FTX manage to buy into a US-licensed bank, a move that should have required federal approval? "And in the hunt for FTX’s missing assets, how will Farmington get dragged into the multibillion-dollar bankruptcy?"

As far as that hunt goes, CBS News reports that the company that was hired to hunt down FTX's assets has recovered $740 million in assets so far, though that's "a fraction of the potential billions of dollars likely missing from FTX's coffers." Meanwhile, Variety reports Amazon is said to be working on an eight-episode limited series on the scandal, with Joe and Anthony Russo's production company, AGBO, to produce. Sources say the brothers, who have directed four films in the Marvel Cinematic Universe, have been in very early talks with some of the Marvel actors they worked with. (Read the full Times piece for more.)

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