FTX-linked Farmington State Bank Cleared from Federal Reserve Enforcement Action

Image by Brian Yue, Midjourney

The Federal Reserve terminated an enforcement action with Farmington State Bank on February 6, announcing that the FTX-affiliated bank had “completed its wind-down plan and no longer functions as a bank.”

“The Board‘s enforcement action, which has been in effect since July 2023, ensured the bank’s operations would wind down in a manner that protected the banks depositors,” the central bank said in its statement.

Farmington State Banks Enforcement Action

The Fed previously asserted in August 2023 that Farmington State Bank and its holding company, FBH Corporation, modified their business plan without notifying regulatory supervisors.

The central bank also announced the termination of two enforcement actions with BNP Paribas in Paris, France.

“Both enforcement actions have been in effect since June 2014 and required BNP Paribas to implement a program to ensure global compliance with U.S. sanctions laws,” the central bank said regarding BNP Paribas.

Today's #EnforcementActions:

— Federal Reserve (@federalreserve) February 6, 2024

Farmington had direct connections to defunct crypto exchange FTXs trading arm, Alameda Research, although neither the Fed enforcement action nor the termination of its action explicitly mentioned FTX or Alameda.

Farmington, formerly known as Moonstone Bank, received around $11.5 million from FTXs sister firm, Alameda Research, through FBH Corporation in March 2022.

Following the collapse of FTX in November 2022, Farmington initially announced plans to withdraw from crypto and revert to its “original mission” as a community bank. When faced with the central banks enforcement action last year, however, Farmington agreed to comply with the order.

“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,” Farmington stated in August.

Farmington Bank Faces Scrutiny

Senator Elizabeth Warren, D-Mass., and Tina Smith, D-Minn., conducted an inquiry into the banks connections with FTX and wrote to the Fed in 2022, seeking information on how Alameda was reportedly able to acquire Moonstone Bank.

In their letters, they expressed concerns, stating, “While the banking system has, so far, been relatively unscathed by the latest crypto crash, FTXs collapse shows that crypto may be more integrated into the banking system than regulators are aware.”