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Moonstone Bank said that after exiting from the crypto space, it will go back to its original format of being a community bank with major rebranding.
The contagion of the collapse of the crypto exchange FTX has far-reaching consequences in the crypto space. On Thursday, January 19, Moonstone Bank announced that it will be exiting the crypto space and will soon return to its “original mission” as a community bank.
Moonstone and Crypto
In its statement on Thursday, the bank said that as a result of “recent events in the crypto assets industry and the changing regulatory environment surrounding crypto asset businesses,” the bank has decided to change its strategy.
Moonstone Bank had earlier received an estimated $11.5 million worth of investment from FTX’s sister company Alameda Research. The bank had reportedly held tens of millions of dollars in FTX deposits and had just started notifying its crypto clients.
As the bank plans to “return to its roots,” it noted that it would no longer use the name Moonstone Bank. Instead, they would be rebranding themselves by re-adopting the Farmington State Bank name, which is popular within the local community for more than 135 years. The change is likely to happen over the next few weeks and local banking customers won’t experience any disruption in the services.
Moonstone Bank didn’t explicitly mention why it’s closing down these accounts. However, the recent turn of events clearly hints towards that. The bank issued letters to a number of its crypto industry customers this week. Moonstone Bank has asked these customers to cease transactions as well as transfer their holdings to another financial institution.
Back in 2020, Moonstone Bank was acquired by Jean Chalopin, the Bahamas-based chairman of Deltec, another FTX banking partner. Chalopin had planned to transform Moonstone into a crypto-focused financial services firm.
Crypto Banks un Trouble
Following the collapse of the crypto exchange FTX, a majority of the crypto banks have come into major trouble. In December Senator Elizabeth Warren had signaled that she would be pressing banking regulators hard over the recent development.
Liquidators in the Bahamas found that Moonstone was holding at least $50 million in FTX deposits across two accounts. However, the status of these funds remains unknown for now.
Along with Moonstone, another bank Silvergate Capital has been facing major trouble in recent times. The crypto bank reported a $1 billion net loss during the last quarter of 2022. Having its links to FTX and Alameda Research, Silvergate Capital also faced massive outflows in the process.