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Through Alameda Research, FTX reportedly holds about $11.5 million in a stake in a small U.S. bank. Recently, reports have revealed that Alameda Research, a sister company to FTX, has a $11.5 million stake in a small U.S. bank.
Some people wonder if this is a ploy to circumvent the banking licensing process. FTX and Alameda Research are facing increasing scrutiny as more information about the two companies’ financial transactions comes to light. Most recently, Alameda reportedly had an $11.5 million stake in a small rural bank in the United States. The bank is called Farmington State Bank (FSB) in Washington State and has only 3 employees. The deal is under scrutiny for a variety of reasons.
First, analysts are looking at how much FTX is embedded in the traditional financial ecosystem.
Second, and perhaps more importantly, they worry that the exchange may have used shares to circumvent banking licensing laws. The FSB is one of the smaller banks in the United States whose stake has more than doubled its net worth. The FSB specializes in granting agricultural loans to farmers. The New York Times reports that 85% of the $84 million in deposits come from only 4 accounts.
The issue that gets a lot of attention here is how FTX managed to get approval to buy shares of the bank. The NYT states that “Banking veterans say it’s hard to believe that regulators would intentionally allow FTX to gain control of a U.S. bank.”
Regulators in many countries freeze FTX operations
In the past, FTX has used alternatives to bypass or circumvent licensing processes. It acquired an Australian company that already had a license called IFS Markets. This allows the exchange to bypass the normal process of obtaining a financial services license.
Following the FTX crash, the Australian Securities and Investments Commission suspended its license. Around 30,000 Australians are believed to be FTX creditors. FTX has also tried to apply for a license in Switzerland, which is said to be quite crypto-friendly. However, it was rejected by regulator Finma. The reason why the rejection was not made public.
See also:
Dubai regulator revokes FTX license
FTX is also facing problems in other crypto-friendly areas. Dubai’s Virtual Assets Authority (VARA) suspended FTX’s license following its demise because the exchange had filed for bankruptcy. Turkish authorities are also investigating former CEO Sam Bankman-Fried for fraud. It is also believed to have confiscated Sam’s property. U.S. authorities are also reportedly searching for the SBF.
Source: cafebitcoin
