The fall of the FTX has caused a contagion that has far-reaching effects in the crypto currency ecosystem. Moonstone Bank announced (1) that it will leave the crypto currency market on Thursday, January 19, 2019. The company said it would shortly return to its "original objective" as a community bank.
Moonstone to Rebrand itself
The bank explained its decision to modify its approach in a statement released on Thursday. The bank cited "recent developments in the crypto assets market and the shifting regulatory environment around crypto asset enterprises" as the reason for the decision to change its strategy.
FTX's sibling business, Alameda Research, had previously invested in Moonstone Bank, which was believed to be worth around 11.5 million dollars. It was alleged that the bank had retained millions of dollars in FTX deposits and had just recently begun alerting its crypto currency customers.
The bank has stated that it would "return to its roots," and as part of that process, it will no longer operate under Moonstone Bank. Rather, it will be rebuilding by embracing the Farmington State Bank moniker, which has been well-known in the surrounding region for over 135 years.
Customers of local banks should not anticipate disruptions in their services due to the transition, which is expected to occur during the next few weeks.
Moonstone Bank did not explain why it is terminating these accounts. On the other hand, the most recent turn of events very strongly suggests that. This week, the bank sent letters to a handful of its customers involved in the crypto currency sector. Moonstone Bank has requested that these clients stop conducting business with the bank and move any assets they possess with the bank to another banking institution.
In 2020, Moonstone Bank was purchased by Jean Chalopin, the chairman of Deltec, also an FTX financial partner. Chalopin is located in the Bahamas, and Moonstone was going to be transformed into a crypto currency-focused financial services organization, according to Chalopin's plans.
It is Not Just Moonstone
Because of the failure of the crypto currency exchange FTX, most crypto banks are currently facing extremely difficult circumstances. Senator Elizabeth Warren indicated in December that she would exert significant pressure on banking authorities about the most recent development.
Executors in the Bahamas discovered that Moonstone had at least $50 million spread over two accounts in FTX deposits. On the other hand, the current standing of this money is currently unknown.
In recent years, not just Moonstone Bank but also the financial institution Silvergate Capital has already been experiencing significant difficulties. During the final three months of 2022, the crypto bank racked up a net loss of one billion dollars. Silvergate Capital, with its connections to FTX and Alameda Research, also saw significant cash withdrawals throughout this phase.