The chairman of the rural bank, Jean Chalopin, also happens to be the chairman of Deltec Bank, which has Tether and Alameda both on its client list. Ftx
The bankruptcy proceedings of cryptocurrency exchange FTX have revealed many new unethical practices. The latest revelation that the bank has a 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.
The Farmington State Bank in Washington has been renamed Moonstone, and is now the 26th smallest bank in the United States. It has a single branch and three employees. FTX invested $11.5 million in FBH through its subsidiary Alameda in March 2022. The Alameda investment was more than twice the bank’s value of $5.7 million, as reported by The New York Times.
Many people see FTX ownership of Moonstone as an attempt to sidestep the requirements of owning a bank license in the United States, which can be quite complicated.
According to one Reddit user, it is often much easier to buy a small bank than to obtain a banking license through traditional channels. This route would be a logical part of a business plan for a company like FTX.
Another user suggested that the lack of regulation on cryptocurrency may be due to the misuse of banking loopholes. Others speculated that Sam Bankman-Fried’s political connections could have played a part in the deal as well, with one user saying:
What has drawn more attention from the crypto community than FTX stake in a U.S. bank is the connection between the rural bank’s parent company, FBH, and another crypto entity, Tether. Tether is the largest issuer of a stablecoin in the crypto market, and this connection has raised questions and concerns among investors.
The chairman of FBH, Jean Chalopin, is also the chairman of Deltec Bank. Deltec Bank has Tether and Alameda on its client list. After acquiring the bank in 2020, FBH submitting a Federal Reserve application nearly 100 years after the bank was founded to facilitate cryptocurrency-related transactions. The bank got federal approval in June 2021, and nine months later, FTX invested in the rural bank, now equipped with Federal Reserve approval.
The banking connection between Tether and FTX/Alameda became a concern for many in the crypto community, as Tether itself has long been under scrutiny for reserve audits. Tether did not respond to Cointelegraph’s requests for comment by the time of publication.
