FTX stake in United States bank raises concerns about banking loopholes

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Ftx Stake In Us Bank Raises Concerns About Banking Loopholes

The bankruptcy proceedings of digital currency exchange FTX have revealed several new aspects of its unethical practices. The most recent revelation around its in one of the smallest United States banks from rural Washington has raised fresh concerns about its operations and alleged misuse of loopholes.

Farmington State in Washington State, now renamed Moonstone, is the 26th smallest bank in the United States with a single branch and 3 employees. FTX invested in the rural bank through its now-bankrupt sister Alameda with an financing of $11.5 Million in its parent company FBH in March 2022. The Alameda financing was greater than double the bank’s value of $5.7 Million, reported The New Times.

The FTX’s ownership in Moonstone is seen as a move to the of a banking in the United States, which as reported by several, is quite a complex task.

1 Reddit user wrote that it takes several 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 strategy 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 Bankman-Fried’s could have played a part in the deal likewise and said:

“With the amount of political connections SBF had, I would not be surprised either if he just got that license for no reason.”

Apart from FTX’s stake in a United States bank, what drew more attention from the cryptocurrency community is the connection in the middle of the rural bank’s parent company FBH and another cryptocurrency entity, Tether (USDT), the largest issuer of a crypto stablecoin in the cryptocurrency market currently.

The chairman of FBH is Jean Chalopin, who likewise happens to be the chairman of Deltec Bank, who has Tether (USDT) and Alameda both on their client’s list. After buying the bank in 2020, FBH applied for Federal Reserve nearly 100 years after the bank was established 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 in the middle of Tether (USDT) and FTX/Alameda became a concern for several in the cryptocurrency community as Tether (USDT) itself has long been under scrutiny for reserve audits. Tether (USDT) didn’t respond to Cointelegraph’s requests for comments at press time.



Continue reading on Cointelegraph.com


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