Federal Reserve ends enforcement action against FTX-linked Farmington Bank

The Federal Reserve has terminated an enforcement action with Farmington State Bank, which had ties to collapsed crypto exchange FTX.

The central bank said in August that Washington-based Farmington State Bank and its holding company FBH Corporation changed its business plan without letting supervisors know. 

"The Board's enforcement action, which has been in effect since July 2023, ensured the bank's operations would wind down in a manner that protected the bank's depositors. Farmington has completed its wind down plan and no longer functions as a bank," the central bank said on Tuesday in a statement. 

The Federal Reserve also announced the termination of two enforcement actions with BNP Paribas in Paris, France on Tuesday. 

FTX ties

Farmington, which used to do business as Moonstone Bank, had direct ties to FTX’s trading arm Alameda Reseach. 

When issued the central bank's enforcement action last year, Farmington said it consented to the order. 

"All bank regulatory approvals for the assumption of deposits and the purchase of assets by Bank of Eastern Oregon of Farmington State Bank have been received. The transaction is expected to close by August 31, 2023," the bank said in August. 

Sen. Elizabeth Warren, D-Mass., and Tina Smith D-Minn., had also probed into the bank's ties to FTX and wrote to the Federal Reserve in 2022 asking for details about how Alameda was reportedly able to buy Moonstone Bank. 

"While the banking system has so far been relatively unscathed by the latest crypto crash, FTX's collapse shows that crypto may be more integrated into the banking system than regulators are aware,'' the letters said.