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FTX owned an $11.5 million stake in this rural bank with just a few employees. What the hell is going on here? Time for a 🧵👇

Farmington Bank is a tiny building in Farmington, Washington - a town of just 146 people in eastern Washington (pictured below) FTX reportedly owned an $11.5 million stake in the bank. How is the bank even worth that much?
It’s tough to say. The bank stopped offering mortgages in 2010 because the paperwork was too complicated. According to a local newspaper in 2010, the bank didn’t offer credit cards, online banking, or a website. Basically, the bank takes in deposits and makes farm loans.
Here are a few stats listed on the bank’s webpage:
So what’s going on here? A few days before FTX made the investment, Farmington Bank revamped its online presence, adopting the name ‘Moonstone Bank’. Moonstone’s website says it’s a “Bank Built for Tomorrow”
According to Protos, a crypto news website, FTX invested $11.5 million for 10% of the bank. The money was to be used as seed funds to expand into online banking for entrepreneurs and crypto investors. Here’s the timeline, according to Protos:
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.
It appears that Moonstone and Farmington Banks are maintaining separate brands: Farmington Bank is the physical location for local Farmington residents to make deposits, and Moonstone is an online banking app targeted at entrepreneurs and tech-savvy customers.
FTX’s investment valued the bank at $115 million. But it only had $10 million in customer deposits. The plan, according to a Moonstone exec, was to revamp the company into a digital-focused bank.
So it appears FTX wanted to move into the digital banking space, which makes sense. But why did they need to partner with such an obscure bank to make that happen? Some have speculated that it was to avoid regulatory scrutiny, but nothing is confirmed.
This is just a guess, but it seems that FTX needed an established US bank with the relevant regulatory licenses to partner with on this digital banking venture.
What happens now? Moonstone can continue to operate with its own team, but FTX’s 10% bank will be included in the bankruptcy proceedings and will likely be sold to another party to pay back FTX creditors.
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Genevieve Roch-Decter, CFA
Former $100MM+ Money Manager • Seen on Bloomberg, FOX & VICE • CEO @grit_capital • Write #1 Finance newsletter on Substack
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