Federal Reserve takes enforcement action on Farmington bank, citing stablecoin venture

The bank previously had ties to both Sam Bankman-Fried and Alameda

article-image

Andy.LIU/Shutterstock modified by Blockworks

share

The Federal Reserve announced that it has taken enforcement action against Farmington State Bank, alleging that it “improperly” changed its business plan and failed to inform the Fed. 

Specifically, the Fed claims that Farmington violated its commitments by changing its business plan without receiving written approval from either the Board of Governors, the Reserve Bank or the Washington State Department of Financial Institutions.

Farmington made a commitment to both work with and help design IT infrastructure to “facilitate the third party’s issuance of stablecoins to the public in exchange for receipt of 50 percent of mint and burn fees on certain stablecoins, and took material steps to implement that memorandum of understanding,” the Fed said in a Thursday filing.

The bank has a history with Sam Bankman-Fried and Alameda, though neither are mentioned in the enforcement action. Back in March 2022, Farmington adopted the moniker Moonstone Bank, which was followed by Alameda investing $11.5 million into the bank.

The action does not cite a specific stablecoin commitment from Farmington, however. According to a Globe Newswire posting on Oct. 24, 2022, Fluent announced a partnership with Moonstone — following the name change — claiming that it would issue a US+ Stablecoin. 

“The Board’s action ensures the bank’s operations will wind down in a manner that protects the bank’s depositors and the Deposit Insurance Fund,” the Fed said.

According to a Business Wire press release, Farmington State Bank “consented to the Federal Reserve order published today. All bank regulatory approvals for the assumption of deposits and the purchase of assets by Bank of Eastern Oregon of Farmington State Bank have been received. The transaction is expected to close by Aug. 31, 2023.”

In January, Farmington — as Moonstone — announced that it would be “discontinuing its pursuit of an innovation-driven business model.” It added that the strategy shift “reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment relating to crypto asset businesses.” It also changed its name back to Farmington.

The bank has direct ties not only to Sam Bankman-Fried and Alameda, but also to Jean Jacques Pierre Chalopin. Chalopin is the “principal shareholder” of FBH Corporation, the owner of Farmington.

He’s also the largest shareholder of Deltec International Group, which is based in the Bahamas and serves a number of crypto companies. Tether, in 2018, announced a banking relationship with Deltec. 


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks

article-image

PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants

article-image

Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians

article-image

Vance, an Ohio Republican, is largely seen as crypto-friendly

article-image

Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high

article-image

Investors add to crypto positions after “turnaround in sentiment due to lower-than-expected CPI,” CoinShares research head says