FTX owned an $11.5 million stake in a tiny rural bank in Washington state with just 3 employees, bankruptcy hearing shows

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The Palouse Hills in Whitman County, Washington, where FTX's investment is located. Education Images/Universal Images Group via Getty Images; Tom Williams/CQ-Roll Call, Inc. via Getty Images
Farmington State Bank had 3 employees and was the 26th smallest bank in America out of 4,800.
FTX then bought an $11.5 million stake in the bank that arose during FTX's bankruptcy proceedings.
This proportion was more than double the bank's previous net assets.
FTX came under closer scrutiny after it emerged that the collapsed crypto giant owned a $11.5 million stake in one of America's smallest banks -- more than double the bank's previous net worth, the New York Times reported.
Based in the small town of Farmington in the rural farming region of Whitman County, Washington, Farmington State Bank was described as "no-frills" by local newspaper The Spokesman-Review in 2010. Its then-president, John Widman, told the paper it stopped making mortgage loans because the paperwork was too much hassle.
The only branch had three employees up until this year and offered neither online banking nor credit cards. Instead, it specialized in agricultural loans to farmers.
FTX's investment came to light during the crypto firm's bankruptcy proceedings, raising red flags about its financial strategy.
Connections between the farmer's bank and the crypto exchange began in March of this year when FTX's sister company, Alameda Research, invested in Farmington's parent company, FBH. The purchase was led by Ramnik Arora, an inner circle of Sam Bankman-Fried who was often responsible for much larger deals.
At the time it was the 26th-smallest bank in America of 4,800. With a net worth of $5.7 million, FTX's stake was more than double the bank's value.
The town of Farmington has a population of just 146 and is so small that Google Street View doesn't cover the entire town.
For a decade Farmingtons Bank held around $10 million in deposits. In the third quarter of this year, deposits jumped to $84 million -- 85% of which came from just four accounts, according to FDIC data cited by the Times.
Online, the bank now appears as "Moonstone Bank," a name that was trademarked a few days before FTX's investment. Moonstone doesn't mention cryptocurrency, but says it wants to "support the development of next-generation finance."
Questions are being asked about how FTX received federal approval to purchase its interest in Farmington. Banking veterans told The New York Times it was hard to believe regulators would knowingly allow the crypto firm to do so.
Moonstone and FTX did not immediately respond to a request for comment sent outside of normal US business hours.
Read the original article on Business Insider

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