On the FTX trail. Investigators continue to trace the thread of dubious cases perpetrated by the exchange’s boss, Sam Bankman-Friedand his clique. This gigantic spider’s web seems to have been woven in close conjunction with the financial sector. As the latest action by Federal Reserve (FED) against the state bank Farmington. The latter would have received shady transactions fromAlameda Research. Full details.
Farmington Bank’s suspicious crypto activities
In November 2022, crypto exchange FTX goes bankrupt. The world discovers the calamitous financial management and, above all, the multiple frauds perpetrated by Sam Bankman-Fried and his cronies. Bankman-Fried was known for having made his fortune in crypto arbitrage. He went on to set up Alameda Research before handing over to Caroline Ellison to set up the FTX exchange.
No content watering all the country’s political bodiesSam Bankman-Fried had also forged privileged relationships with the banks. And some of them may have been a little too closely involved in these affairs, the legality of which is now being questioned.
Such was the case with Moonstone recently renamed Farmington. Today it is the subject of a new investigation by the FED and the Washington State Department of Finance. In March 2022, the bank received a payment of 11.5 million from Alameda Research, through its subsidiary FBH Corporation. Furthermore, the bank is said to have modified its business plan in order to move into the crypto ecosystem without informing the FED in advance, as it was required to do.
In particular, the bank allegedly facilitated the issue of stablecoins for an unnamed third party. In exchange for a 50% creation fee (mint in English) and deletion (burn in English).
FED investigates potential links with FTX
Farmington Bank finally announced in January 2023 that it was abandoning its cryptocurrency-related activities in order to « return to its original mission » as a deposit bank. This step backwards from the crypto sector comes less than two months after the collapse of FTX. Has the bank lost some of its feathers?
In any case, the maneuver is suspicious enough for the FED to decide to investigate.
« The action [de la FED] is to ensure that the bank’s operations will be terminated in a manner that protects depositors and the deposit insurance fund. (…) This action also prohibits Farmington and FBH from paying dividends or capital distributions, using their liquid assets or engaging in certain activities without approval from their supervisors. »
The FED
Whether it’s the announcement of the FED’s investigation or that of the shutdown of Farmington’s crypto activities, neither specifically mentions FTX, and yet the shadow of the exchange is everywhere. Sam Bankman-Fried’s influence was deeply rooted in traditional American finance and politics. The extent of the damage was all the greater. And we may not yet be at the end of our surprises.
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