Recent bankruptcy documents have revealed the relationship between Sam Bankman-Fried’s bankrupt Alameda Research and a rural bank in Washington called Farmington State Bank, now known as Moonstone. As scrutiny continues, Protos had the opportunity to ask Moonstone’s chief digital officer, Janvier Chalopin, some questions.
Farmington State Bank was purchased by a company called FBH in 2020. It has since revamped the bank, renaming it Moonstone in March of this year. 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 business.”
More importantly, he addressed the $11.5 million elephant in the room: the venture capital backing from Alameda Research given to the bank in March. The investment was for 10% of the bank, according to Chalopin, which would value Moonstone at $115 million — a significant increase in value, considering that at the time, the bank held only $10 million in customer deposits and had roughly 25 employees.
For comparison, Silvergate Bank has had nearly $12 billion in digital asset customer deposits alone in 2022, and has almost 500 employees.
Chalopin said the $11.5 million was “seed funding… to execute our new plan of being a tech focused bank.” When asked what would happen to that funding now that Alameda and FTX are bankrupt he said the bank is “still waiting,” but suspects “[the equity] will follow the bankruptcy proceedings and be sold at some point.”
- On March 1, 2022, Farmington State Bank trademarked the name Moonstone Bank.
- Three days later, it adopted the new moniker.
- On March 7, Alameda Research infused $11.5 million into Moonstone — at the time, more than double the bank’s entire net worth.
Moonstone’s increased deposits and the four entities
In a New York Times article, FDIC data was referenced to suggest that a mere four accounts were responsible for almost the entire 600% increase in customer deposits at Moonstone in the third quarter of this year. Chalopin pushed back on this, suggesting that the bank has had “substantially more customers than that since we opened our doors to friends and family on our new platform.” He didn’t deny the numbers’ accuracy.
Chalopin, however, doesn’t see the collapse of Alameda as presenting a real obstacle for the bank, stating “reputationally, [it’s] sad to see PR coming out negatively against us while we’re in early startup mode,” but otherwise didn’t refer to any real concerns.
Deltec and Moonstone
Chalopin was asked about the connections between Deltec Bank & Trust and Moonstone — his father, Jean Chalopin, is both chairman of the board for Deltec and sits on the board at Moonstone. The CDO of Moonstone emphasized that “regulators are all over that… [board members] have to ensure [that they] have no transactional interaction with foreign financial institutions.” The only affiliation, he said, is “common shareholding.”
He also clarified previous Protos reporting which suggested the bank hadn’t been a Federal Reserve account holder until last year, stating that Moonstone had indeed been a Federal Reserve account holder, but “switched from FDIC as their regulator to the Fed of SF.”
Still, Protos was curious as to why FBH decided to purchase Farmington, a tiny bank nestled on the border of Washington and Idaho. Chalopin called Farmington “an extremely lucky find,” and the United States “the final frontier for banking.”
He named Cross Rivers, Silvergate, Signature, and Evolve as examples of what FBH is attempting to do with the transformation of Farmington from a small, rural, agriculture focused bank, into Moonstone.
Chalopin claimed that Farmington “was clearly on the decline and slowly dying,” before FBH came into the picture, so the transition to Moonstone was seen as a “lifeline… for the community.” He plans on renovating the branch in Farmington, he said.
Questions remain for regulators
While rules and regulations bar bank employees from disclosing their customers to the public, it’s safe to assume that regulators will be double checking Moonstone’s books after all the media attention.
Questions remain as to whether funds moving through the bank are related to Alameda and FTX or Tether and what kind of know-your-customer (KYC) and anti-money laundering (AML) was performed to ensure the funds weren’t tainted, or for instance, belonged to FTX customers rather than Alameda Research.
So, is Moonstone headed ‘to the moon’ or down an uncertain, hazy, and stoned out path? Only time will tell.