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Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions
Key Excerpts from Article on Website of New York Times
Posted: January 29th, 2023
https://www.nytimes.com/2022/11/23/business/ftx-cryptocurren...
Among the many surprising assets uncovered in the bankruptcy of the cryptocurrency exchange FTX is a relatively tiny one that could raise big concerns: a stake in one of the country’s smallest banks. The bank, Farmington State Bank in Washington State, has a single branch and, until this year, just three employees. It did not offer online banking or even a credit card. The tiny bank’s connection to the collapse of FTX is raising new questions about the exchange and its operations. The ties between FTX and Farmington State Bank began in March when Alameda Research, a small trading firm and sister to FTX, invested $11.5 million in the bank’s parent company, FBH. At the time, Farmington was the nation’s 26th-smallest bank out of 4,800. Its net worth was $5.7 million. FTX is a now bankrupt company that was one of the world’s largest cryptocurrency exchanges. A judge allowed the law firm Sullivan & Cromwell to continue advising FTX on bankruptcy. 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. “The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the F.D.I.C., state regulators and the Federal Reserve,” said Camden Fine, a bank industry consultant.
Note: An in-depth investigation by Whitney Webb and Ed Berger further unearths the mysterious connections between FTX and Farmington State Bank. Extending far beyond Sam Bankman-Fried and FTX, they make a case for a deeper criminal network at play, with troubling connections to this bank. Incidentally, the firm Sullivan & Cromwell has old connections with the CIA. For more along these lines, see concise summaries of deeply revealing news articles on financial industry corruption from reliable major media sources.
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