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Prosecutors seized just under $50 million belonging to FTX founder Sam Bankman-Fried (SBF) held in Farmington State Bank on Jan. 4, according to a Yahoo Finance (YF) report on Jan. 24.
The total amount seized was only $500 short of $50 million, according to the YF report. The bank specialized in agricultural loans to farmers and had only three employees when SBF deposited this amount. It also didn’t offer online banking services or credit cards and had a net worth of $5.7 million.
Alameda invests in Farmington
SBF’s venture capital Alameda Research invested $11.5 million in the bank in March 2022, according to a New York Times (NYT) report published in November 2022,
Farmington has been steadily collecting about $10 million in deposits for a decade — by the third quarter of 2022, this amount increased to $84 million, according to the NYT report. Of this increase, $71 million came from new accounts.
The bank also changed its name to Moonstone Bank and started offering online banking services after FTX’s investment, according to the NYT report.
The former head of the Independent Community Bankers of America, Camden Fine, reportedly shared his thoughts about the investment, according to the NYT report. He said:
“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. It’s just astonishing that all of this got approved.”