Moonstone No More: Alameda-backed Bank Will No Longer Service Crypto/Cannabis Industries

Following the seizure of bank accounts by federal prosecutors tracking down assets held by fallen FTX founder Sam Bankman-Fried and others, Farmington State Bank, the tiny Washington state institution that received a $11.5 million investment in March from FTX offshore hedge fund, Alameda Research Ventures – and subsequently changed its name to Moonstone Bank – has decided to reverse course, discontinue its plans to provide financial services to the crypto and cannabis industries, return to its roots serving the local community, and retire the Moonstone moniker.

“The bank is returning to its original mission as a community bank and is discontinuing its pursuit of an innovation-driven business model to develop banking services for industries such as crypto assets or hemp/cannabis,” said the company in a Jan. 19 announcement. “The change in strategy reflects the impact of recent events in the crypto assets industry and the resultant changing regulatory environment relating to crypto asset businesses.”

As Cannabis Business Executive reported in November, the bank became the focus of attention following revelations that Alameda had invested heavily in the bank. Further questions were raised when the bank’s chief digital officer, Janvier Chalopin, suggested that the minuscule institution – which had three employees prior to Alameda’s investment – had a valuation of $115 million, more than double the bank’s worth at the time.

The source of that valuation became clearer in early January after prosecutors announced that they had “seized $49,999,500 that Bankman-Fried had deposited with Farmington State Bank,” per Yahoo Finance. In addition to that haul, added the site, “they have seized just over $100 million in an account with the crypto-focused bank Silvergate Capital and $21 million with the brokerage firm ED&F Man Capital Markets.”

For Silvergate, the fallout has been calamitous; it announced this month that it was cutting 40 percent 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,” reported BankingDive, which noted other banks also leaving the space. “Metropolitan Commercial Bank, once a partner to bankrupt crypto firm Voyager Digital, said this month it would exit the sector.”

Its coffers no longer bulging with crypto-cash, and apparently free of any liability in the matter, the resurrected Farmington seems to want to forget it ever happened. “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,” it assured the public. “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.”