The collapse of FTX last year revealed a host of unusual financial connections, perhaps the most puzzling of which was the relationship between Sam Bankman-Fried’s trading arm Alameda Research and Farmington State Bank. The small rural bank in Washington state, known for its size, one branch, and decades of serving the local community, has since undergone a dramatic shift in focus.
Control of Farmington State Bank was transferred to Jean Chalopin in 2020 through FBH Corp., where Chalopin was an executive at the company. Chalopin was also chairman of Deltec, a key bank for Alameda Research and remains a major banking partner for Tether, one of the largest fiat-backed stablecoins. Interestingly, the context notes that Noah Perlman, Binance’s current chief compliance officer and former U.S. Department of Justice (DOJ) and U.S. Drug Enforcement Administration (DEA) official, is also listed as a director of FBH Corp. but has not publicly spoken about the connection.
Farmington State Bank has undergone a major transformation following its acquisition by Charlopin’s FBH Corp. After decades of focusing on community banking, the bank has pivoted to processing cryptocurrencies and international payments. The new direction has prompted the bank to seek approval to join the Federal Reserve System. The move is considered highly unusual, especially as it appears to ignore the bank’s for-profit overseas interests.
In late December, Federal Reserve spokesman Eric Kollig declined to comment on the process regulators followed in approving Chalopin’s acquisition of the bank’s charter in 2020. The bank subsequently changed its name from Farmington State Bank to Moonstone Bank, clearly signaling its new ambitions in the digital asset space.
In early March 2022, just days after adopting the Moonstone name, Alameda Research, which has close ties to FTX, made a major investment, injecting $11.5 million into the bank. At the time, the investment amount was more than double the bank’s entire net assets, highlighting Alameda’s commitment relative to Moonstone’s size.
Janvier Chalopin, son of Jean Chalopin and chief digital officer of Moonstone, described the funding from Alameda Research as “seed capital…to execute on our new plan to become a tech-focused bank.” The investment was seen within the bank as a key step in its transformation into a technology-centric financial institution.
Following Alameda’s acquisition of the bank’s stake, Jean Chalopin issued a statement saying the move “marks a recognition of the value of our purpose by one of the world’s most innovative financial leaders.” He further said, “This marks a new step towards the future of banking” and positions the small bank at the forefront of financial innovation.
Financial news outlets such as Protos have commented on the peculiarities of the deal. They noted that it was unusual for a Bahamas-based company like FTX to acquire a stake in a U.S. federally approved bank without appearing to be subject to rigorous regulatory scrutiny. This apparent oversight by regulators has raised questions among observers.
Washington state regulators said they were “aware” of Alameda’s investment in the bank, which at the time went by names such as Farmington and Moonstone. Nonetheless, they stood by their decision at the time not to intervene or take further regulatory action, allowing the investment and the bank’s strategic transformation to proceed.
The money flowing into the revamped Farmington, now Moonstone Bank, isn’t coming exclusively from FTX/Alameda. According to a New York Times report, the bank’s deposits had hovered around $10 million for decades, but have quickly surged to $84 million in 2022. A large portion of that, $71 million to be exact, came from just four new accounts added in a relatively short period of time.
Following the announcement of the Alameda investment, Moonstone Bank appointed Ronald Oliveira as CEO on the same day. Oliveira’s background includes working at Revolut, which has been hailed as the “leading digital alternative bank” and has received funding from Jeffrey Epstein partner Nicole Junkermann. The executive appointment added another layer of mystery to the bank’s evolving structure.
About two months later, the bank further expanded its team, hiring Joseph Vincent as legal counsel. Prior to joining Farmington/Moonstone, Vincent served for 18 years at the Washington State Department of Financial Institutions as General Counsel and Director of Legal and Regulatory Affairs. This move brings to Farmington/Moonstone an expert with extensive experience in state-level financial regulation.
Shortly before FTX’s collapse, Farmington/Moonstone inevitably came under scrutiny. This was after the bank had formed a partnership with a company called Fluent Finance. At the time, Fluent Finance was little known in the media and had received little attention, save for an investigation published by Unlimited Hangout in December that sought to uncover Fluent’s operations and connections.
Even after FTX’s collapse and Farmington/Moonstone’s subsequent closure of operations in the months following, Fluent Finance remained active, particularly successful in establishing partnerships with important government agencies. Specifically, the company began to focus on partnerships in the Middle East and positioned itself to play a central role in the emerging central bank digital currency (CBDC) landscape in both Western and Eastern economies.
Despite Fluent Finance’s association with the now-defunct Moonstone and its notable success since then, the relatively low media attention it has received is thought to be related to its nature as a company. From its inception, Fluent appeared to be acting as a front for some of the world’s most powerful commercial banks, actively building the so-called “trusted” digital infrastructure for the future economy. The investigation (details in the original report) sought to explore Fluent’s history and trajectory in hopes of uncovering the motivations behind the efforts of Chalopin and Bankman-Fried and others to transform the tiny Farmington State Bank.
The peculiar incident of a giant cryptocurrency entity like FTX funneling tens of millions of dollars into a small rural bank, only to have it seized as it collapsed, is less an isolated anomaly than a brief, dramatic symptom of a profound and ongoing transformation. The entanglement reveals the ambitions of the players trying to connect these realms, laying the infrastructure for future digital currencies, whether central bank-issued or commercial bank-led.
