The Federal Reserve shut down Farmington Bank over an unapproved stablecoin project
Date: 2023-08-18 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
The Federal Reserve took action against Farmington State Bank on August 17, alleging that the bank had adopted a stablecoin strategy without notifying regulators or obtaining approval.
A US government agency said it had approved Farmington's bid to become a bank holding company in 2020, at which time it imposed certain conditions on the bank and its major shareholder, Jean Chalopin. These conditions did not allow the bank to change its business plan and take certain actions without approval.
Farmington allegedly violated these terms in 2022 when it began working with a third party on the IT infrastructure for a public stablecoin. The bank would receive 50% fees for minting and burning certain stablecoins.
The third party and stablecoin in question were not identified in the Federal Reserve report. However, past announcements suggest that Farmington, which operated at the time as Moonstone Bank, partnered with Fluent Finance on its US+ stablecoin in 2022.
US+ appears to be a fairly insignificant stablecoin as its standby data suggests it has a backing of just $194,286. The same amount is presumably in circulation.
Farmington says it will close
Farmington State Bank said on Aug. 17 that it would wind down operations, adding that it agreed with the Federal Reserve's latest executive order.
The bank said it was liquidating and curtailing operations. It also says that the Bank of Eastern Oregon will buy his assets, take over his deposits in the deal, and that regulatory documents have been obtained. Farmington said the deal was scheduled to close on August 31, while the Federal Reserve's own notice said Farmington entered into the purchase agreement on May 12.
Farmington previously attracted attention in January. At that time, it ceased its cryptocurrency services and returned to its current role as a public bank. This change also resulted in the bank's rebranding from Moonstone Bank to Farmington State Bank.
January 24 reports highlighted the bank's ties to FTX founder Sam Bankman-Freed, whose assets were seized through the bank earlier that month. These asset forfeitures have not been recognized in the latest actions of the Federal Reserve.
