Farmington State Bank is abandoning its plan to develop banking services related to crypto and cannabis, the company announced Thursday.
The bank will also stop using the Moonstone Bank brand it developed for such “innovation-driven” pursuits, it said.
Farmington’s announcement did not mention embattled crypto exchange FTX by name but said the strategic pivot “reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment.”
Moonstone last January secured an $11.5 million investment from Alameda Research, a trading firm launched by FTX founder Sam Bankman-Fried, according to Forbes.
FBH, a company owned by French banker (and “Inspector Gadget” co-creator) Jean Chalopin, bought Farmington State Bank in 2020. Chalopin also serves as chairman of Bahamas-based Deltec Bank, which itself secured a $50 million loan from FTX, Forbes reported earlier.
Farmington, a 135-year-old bank headquartered in a Washington state town with roughly 150 residents, began notifying its crypto industry clients last week that it plans to close their accounts, the publication reported, adding the bank asked customers to cease transactions and transfer their holdings to another financial institution.
“The return to its role as community bank will be seamless for the bank’s local customers in the Farmington community with no change or disruption of services,” Farmington said in Thursday’s announcement. “The bank has consistently remained committed to safe and sound practices, has kept its balance sheet liquid and customer deposits have remained secure and fully accessible.”
The bank was thrust from obscurity in November, when The New York Times profiled the bank. It since became the subject of concern from lawmakers and regulators warning of contagion from FTX’s collapse.
Farmington is hardly the first bank to retreat from the crypto space. Metropolitan Commercial Bank, once a partner to bankrupt crypto firm Voyager Digital, said this month it would exit the sector. Crypto-heavy Silvergate Capital announced this month it would cut 40% of its staff after FTX’s collapse triggered a run that forced the bank to sell assets at a loss to cover roughly $8.1 billion in withdrawals.
Silvergate saw its crypto-related deposits drop 68% in the fourth quarter. Silvergate and Signature Bank, another FTX financier, have secured billions of dollars in advances through the Home Loan Bank System, a consortium that provides liquidity to financial institutions, Forbes reported.