In an intense move reminiscent of a referee in a heated game, the Federal Reserve announced strict capital conservation requirements and other clampdowns Thursday, in light of the closure of Farmington State Bank.
The petite rural lender from Washington, whose history can be traced back to the charming 1880s, found itself in hot waters when its connections to the volatile cryptocurrency industry surfaced post the dramatic FTX meltdown.
From Fields to Crypto: A Bank’s Transformation
Gaining its roots as an agricultural-centric bank, Farmington underwent a dynamic transformation when a crypto-charged holding company acquired it in 2020.
Like a caterpillar turning into a radiant butterfly, the bank metamorphosed into “Moonstone Bank,” touting itself as a “technology and data-first” entity.
Their metamorphosis was further accentuated with a hefty injection of funds from an FTX affiliate.
Closure of Farmington State Bank: Crossing Boundaries and Paying the Price
However, every butterfly isn’t welcomed by the garden. The Federal Reserve pointed out that Farmington took a leap too far.