What prompted Bankman-Fried firm to invest $11 million in a company that bought a tiny rural bank?

I will admit to being absolutely fascinated by mysteries and scams, especially when they involve politicians and wealthy con artists.

Bankruptcy filings by crypto "exchange" FTX reveal a curious relationship to a small bank in rural Washington. Farmington State Bank is actually the 26th smallest bank in the US, out of over 4,700.  Until this year it had just three employees.

The bank was formed way back in 1929 in the tiny town of Farmington--population just over 100.  In 2010 the bank’s president, John Widman, bragged about not offering credit cards and having more deposits than loans.  So clearly FTX wasn't looking at the bank as a booming hub of commerce--at least not yet.

According to bank president Widman, in 1995 the bank was purchased by an allegedly British citizen named Archie Chan, who supposedly wanted to turn the bank into an international banking hub.  No details on the purchase price.

But for the next 25 years Chan did nothing with the bank.  But in 2020, everything changed when the tiny bank was bought by a company called FBH.

The CEO of FBH is Jean Chalopin--who also happens to be CEO of "Deltec Bank and Trust," headquartered in the Bahamas.  By coincidence, Deltec is one of the main banks used by both Alameda Research and a crypto "stablecoin" called Tether.  After the purchase Chalopin joined Farmington’s board of directors.

Interestingly, today Deltec's website included this note: 

"Deltec Bank does not hold or trade any digital assets for its own account or on behalf of its clients, therefore has no credit or asset exposure to FTX."

Shortly after the purchase the bank applied to become part of the Federal Reserve system — and on June 30, 2021, that application was approved.  

The bank then began dealing with cryptocurrency and international payments, setting up international wire transfers and SWIFT transfers through the Fed system.

On March 1 of this year, Farmington State Bank trademarked the name Moonstone Bank, and three days later the bank changed its name to Moonstone.

By completely coincidence, six days later Alameda Research—founded by Sam Bankman-Fried before he started FTX—invested $11.5 million in FBH, apparently to buy a ten percent stake in the tiny rural bank, which only had about $10 million in deposits at the time.  Later we'll see that Alameda's "investment" of $11.5 would value the bank at $115 million.  Very crazy.

FBH's CEO Jean Chalopin described this as, “Alameda Research’s investment into FBH Corp and Moonstone Bank signifies the recognition, by one of the world’s most innovative financial leaders, of the value of what we are aiming to achieve.”

Question: Who's the "we"?  And can anyone translate Chalopin's word-salad?

For decades Farmington State Bank had consistently reported deposits of around $10 million.  But in the third quarter of 2022 deposits to the renamed "Moonstone Bank" jumped to $84 million.  The NY Times reported that $71 million of the newly-added $74 million came from just four new accounts.

Wonder who those account holders were, eh?

As the huge crypto firms Terra, Three Arrows Capital and Celsius were collapsing earlier this year, three Moonstone reps spoke at a crypto event in Seattle.  The three were Janvier Chalopin--son of the CEO of FBH; Daniel Ranallo, and Josey Booth. All three recently scrubbed their LinkedIn profiles.

No one has explained what prompted Alameda to "invest" $11.5 million in FBH (thus in the bank), and no one has explained why a small, rural bank in eastern Washington state would suddenly attract $74 million in new deposits, and would then start moving millions of dollars.  

And a *huge* question is how a Bahamas-based company like FTX, with ongoing investigations by top financial watchdogs, could get permission to purchase a stake in a federally approved bank.

As the NY Times phrased it--with a degree of understatement usually reserved for corrupt dealings of top Democrat politicians and their notorious offspring,

It’s unclear how FTX was allowed to buy a stake in a U.S.-licensed bank, which would need to be approved by federal regulators. Banking veterans say it’s hard to believe that regulators would have knowingly allowed FTX to gain control of a U.S. bank.

Ooohh, "It's unclear" y'say?  Oh, I think I can clear that up for ya, NYT.  Bankman-Fried had pledged one BILLION dollars to the Democrats for the 2024 presidential election.  A very few Democrat pols may have been bright enough to suspect SBF was running a huge scam, but they'd never be able to convince the real powers in the Democrat party, who would do literally anything to grab the promised billion dollars.  And of course EVERY top regulator is a liberal Democrat.

Do the math, cupcake.  When the people at the top are corrupt, what kind of results do rational people expect?

Did that clear things up for you corrupt coverup artists at the Times?

It seems Sam Bankman-Fried’s scam--and its political protectors--is only beginning to unravel. 

Source.

Update: More on this "unusual" purchase of a tiny bank.

March 7, 2022 /PRNewswire/ -- FBH Corp. and its fully owned subsidiary Moonstone Bank™, a *robust financial platform* to empower fast-growing innovative and disruptive sectors, today announced that it has raised $11.5 million from an investment by Alameda Research Ventures.

FBH Corp and Moonstone Bank have committed to making traditional financial systems work for innovative small to medium-sized enterprises (SMEs) who are underserved by the traditional financial industry. Moonstone Bank's unique platform is designed to break down the barriers that limit the growth potential of trailblazing SMEs looking to increase their footprint - by providing easy access to modern banking features, valuable services and the means to take their businesses further.

Ramnik Arora of Alameda Research Ventures said "At Alameda we are committed to growing the industry and supporting businesses that are creating real change. Moonstone Bank offers solutions to address the challenges faced by high potential, fast-growing small and medium-sized enterprises by giving them access to a full suite of banking services. The user-friendly, *compliant, regulated* and innovative platform, makes Moonstone Bank an attractive and valuable force in a dynamic ecosystem."

Oh absolutely.  A "dynamic ecosystem," y'say?  My bullshit detector is already pegging.

Jean Chalopin, Chairman of FBH Corp, said, "Alameda Research's investment into FBH Corp and Moonstone Bank signifies the recognition, by one of the world's most innovative financial leaders, of the value of what we are aiming to achieve."

FBH Corp also announced today the appointment of Ronald Oliveira as Moonstone Bank's Chief Executive Officer. Mr. Oliveira will be leading the digital transformation of the organization into a top provider of innovative financial services to fast-growing industries such as blockchain, cryptocurrencies and cannabis.

"Moonstone Bank is poised to be market innovator, creating enhanced economic opportunity for millions of unique and innovative businesses that are being excluded or marginalized from the traditional banking ecosystem," said Ron Oliveira, CEO of Moonstone Bank. "This is incredibly exciting! The possibilities ahead for our bank are endless and I am grateful for the opportunity to be part of building the future of finance for the next generations, along with those leading-edge industries."

About FBH Corp:
FBH Corp is a bank holding company, and its Washington State-based Moonstone Bank is a fully chartered bank with roots in the state of Washington since 1887. Moonstone Bank provides a *robust financial platform* designed to *empower the next generation of growing industries.*

Moonstone Bank combines first-in-class regulatory, compliance and *risk expertise* with a simple, yet powerful *open-architecture platform* built to offer valuable financial products and services *in a single ecosystem.* We help customers realize the full potential of their unique businesses.

<<My bullshit detector just overloaded.

Update: As scrutiny continues, Protos had the opportunity to ask Moonstone’s chief digital officer, Janvier Chalopin (son of the CEO of FBH, which bought the bank) some questions.

Farmington State Bank was purchased by FBH in 2020. In March of this year FBH renamed the bank "Moonstone."  Chalopin explained that the name was derived from the two asset classes that the startup bank was focused on: “Playing on ‘to the moon’ and ‘stone’ for our target industries of digital assets and hemp/cannabis related businesses.”

Chalopin also addressed the major question of why the Bankman-Fried firm Alameda Research gave FBH $11.5 million to invest in the tiny bank.  Chalopin said the amount was for a 10% interest in the bank.

This is significant because that would imply that the bank was valued at $115 million —an astonishingly unlikely figure considering that at the time the bank had only about $10 million in customer deposits at the time.

This story just keeps getting stranger.

To see some industrial-strength bafflegab, check out the bank's webpage:  www.moonstonebank.com