The Federal Reserve Board, co-operating with the Washington State Department of Financial Institutions, recently called out Farmington State Bank, colloquially known as Moonstone Bank, for engaging in clandestine operations dealing in digital assets. This shadow activity was intrinsically linked to the now-inoperative crypto exchange FTX, prompting immediate enforcement action.
Moonstone Bank’s notorious transition to a pro-digital-asset stance in 2022 has raised several eyebrows. Such a shift in business strategy was not only carried out discreetly, it blatantly diverged from a prior agreement in 2020 with the Reserve Bank limiting the institution to traditional banking operations. Although the bank committed to abstaining from these online operations, it apparently collaborated with a third party to construct an IT infrastructure, capable of issuing stablecoins. A handsome 50% of associated mint and burn fees was allegedly received by the bank as compensation, painting a rather tumultuous scenario.
Farmington State Bank‘s foundations rooted in serving the community begin to fade when Alameda Research, a sister company of the now-defunct FTX, infiltrated the institution by acquiring an $11.5 million stake. Even more incriminatory were the charges wrested against Sam Bankman-Fried, FTX’s founder, by the federal prosecutors who commandeered $50 million from the bank. These funds were reportedly part of a scheme devised by FTX to bamboozle crypto enthusiasts.
Cocooning criminal charges continue to surround Bankman-Fried, owner of FTX. The Department of Justice (DOJ) is now pressing allegations regarding the misuse of customer deposits, claiming that Bankman-Fried embezzled funds from the crypto exchange for personal gain. These embezzled funds reportedly found their way into political campaign contributions, personal investments, and acquisitions, amounting to more than $100 million.
The most recent charges faced by Bankman-Fried followed his re-incarceration over supposed witness interference, intensifying Legal troubles for the embattled FTX founder. US District Judge Lewis Kaplan, determined that Bankman-Fried likely attempted to manipulate witnesses on two or more instances, encapsulating this spiral sequence of crypto-related allegations.
This stain on the fabric of digital finance undeniably highlights the necessity for sturdy regulation and oversight, rekindling discussions about cryptos’ unregulated nature. As the world takes steady strides towards an increasingly digital future, the need for digital asset regulation is critical to safeguard investor interests without stifling innovation.
Source: Cryptonews
