Moonstone Bank To Bow Out Of Crypto Following FTX Demise

Updated: 20 January 2023

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Moonstone Bank has announced that it will leave the cryptocurrency sector and focus on being a community bank. Moonstone is a bank in Washington that obtained an investment of around $11.5 million from Alameda Research, the sister company of FTX.

Moonstone Bank leaves crypto after FTX bankruptcy

The bank issued a statement on January 18 saying it would change its strategy because of the recent developments in the digital asset industry. It further noted that the regulatory environment surrounding crypto assets was also changing.

The bank is planning to return to its original mission, and one of the steps it has taken to achieve this is rebranding. The bank will be dropping the name Moonstone Bank and will return to using its former name, Farmington State Bank. The name has been popular with the local community for 135 years.

The bank has further said that these changes will be effected in the coming weeks. However, during the time it takes to shift from the crypto space, the bank has said that local banking clients will not face any disruption in their services.

Moonstone Bank has not mentioned FTX’s bankruptcy as the main reason behind its decision. Nevertheless, the FTX situation likely triggered the decision. In 2020, Moonstone Bank was acquired by Jean Chalopin, the chair of Deltec, a banking partner of FTX.

In January 2022, Chalopin sought investment of $11.5 million from Alameda Research. The investment was geared toward transforming Moonstone from a community bank into a financial services firm that offers crypto services.

Banks affected by the FTX debacle

Moonstone Bank is just one of the banks that appear to have been affected by the demise of former exchange giant FTX. Silvergate witnessed a bank run on the platform on January 5, forcing it to liquidate some of its assets at a loss. The bank was forced to let go of 40% of its employees as withdrawals increased to around $8.1 billion.

The layoffs at Silvergate, one of the banks that had a close relationship with FTX and Alameda, saw 200 employees leaving the firm. The bank further announced that it would no longer work on its previous plan of creating its digital currency.

Metropolitan Commercial Bank, one of the first banks to enter the crypto sector, also announced that it would be exiting the crypto industry. Earlier this month, the bank issued a statement saying it would wind down all its crypto-related offerings this year.

Metropolitan is a New York-based bank with around $6.4 billion in assets under management. It explained that its decision was caused by the recent developments in the crypto industry and the changing regulatory landscape. The bank noted that the move would have a minimal financial impact on its operations, as its active crypto clients account for around 1.5% of total revenues and 6% of all deposits.

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