The Fed has issued a sanction decision against Farmington State Bank, a small credit institution linked to the bankrupt cryptocurrency exchange FTX.
The action, announced Thursday, requires the bank and its holding company, FBH Corp., to cease engaging in unsafe or unsound banking practices and to cease operations on an orderly basis.
The Fed also placed restrictions on the bank's ability to pay dividends, divest its assets, or engage in certain activities without the prior approval of its regulators.
The Fed said in its statement:
“The Board's decision guarantees the termination of the bank's activities in such a way as to protect the bank's depositors and the Deposit Insurance Fund. The action also prohibits Farmington and FBH from distributing dividends or capital, distributing cash assets, and engaging in certain activities without the approval of their supervisors.”
Farmington had planned to offer banking services to digital asset companies, but abandoned those plans in January after facing regulatory pressure. The bank said it consented to the Fed's decision and expects to complete the sale of its assets and deposits to the Bank of Eastern Oregon by August 31.
Farmington, formerly Moonstone Bank, came to the fore after the collapse of FTX, after hedge fund Alameda Research, of which Sam Bankman-Fried was one of the founders, invested $11.5 million in the bank and acquired a non-controlling stake.
*Not investment advice.
