© Powered by Geekwire Sen. American Elizabeth Warren at her 2019 campaign rally in Seattle. (Photo by GeekWire/Todd Bishop)Mon. Elizabeth Warren (Massachusetts) and September. Tina Smith (Minnesota) is leading the US banking regulator to investigate links between the banking sector and crypto firms, including Moonstone Bank of Farmington, Washington.
"Banks' relationships with crypto companies raise questions about the safety and soundness of our banking system and expose loopholes that crypto companies might try to exploit to gain greater access to banks," the senators wrote in their letter to the Federal Reserve on Wednesday. . Federal Deposit Insurance Corporation and Office of the Superintendent of Currency.
Warren and Smith cite a Nov. 23 New York Times report about how Moonstone received $11.5 million from Alameda Research, a subsidiary of failed cryptocurrency exchange FTX. They also note that Jean Chalopin, who runs parent company Moonstone FBH, is also the chairman of Bahamas-based Deltec Bank. Deltec's most prominent customer is Tether, a $65 billion cryptocurrency company.
Moonstone Bank, formerly known as Farmington State Bank, was acquired by FBH in 2020. Farmington State Bank changed its name before investing in FTX.
By purchasing Farmington, Moonstone obtained a bank charter, a business license required for US financial institutions that handle deposits and provide other banking services. Moonstone now bills itself as a "certified digital bank," employs several people in the Seattle area and is based in Bellevue, Washington, according to its LinkedIn page.
Banking experts previously told GeekWire that bank acquisitions require serious due diligence from regulators. Since Moonstone is partly overseas and involved in crypto, they say the deal should raise more regulations.
Farmington hails from the small town of Farmington, Washington, near the border between Washington and Idaho. The lender, founded in 1887, previously provided loans focused on agriculture.
Before it started raising capital to become a technology bank, Farmington had only three employees and was the 26th largest bank out of 4,800 in the United States, according to The New York Times. He has a net worth of $5.7 million and does not offer online banking or credit cards, according to the Federal Deposit Insurance Corporation.
As reported by The Times, in the third quarter of this year, bank deposits increased by almost 600%, to 84 million dollars. Most of the growth came from the four new accounts, according to the Times.
Warren has long been a crypto skeptic. He has repeatedly warned that the nascent industry is poised for financial crime, danger to consumers and threats to the environment because of the amount of energy required to mine bitcoins and other digital assets.
Next week, lawmakers have hosted two hearings on the FTX collapse. Company founder Sam Bankman-Fried said Friday on Twitter that he would appear before a congressional committee.
Warren and Smith concluded the letter with a list of questions asking banking regulators to "better understand the extent of exposure of the banking system to the crypto industry and how banking regulators currently evaluate crypto-banking relationships."
FTX has ties to other Seattle-based companies: Last year, its venture arm participated in a $70 million seed round at Seattle-based Protego Trust Bank, a cryptocurrency bank that issued a conditional charter in February 2021. Protego did not specify. in letters from senators.