FTX says investigating 'unauthorized transactions' - Ontario, CA Teachers marks down $95 million investment in FTX to zero - also BlockFi files for ba

[Emily]

Note: They aren't kids. They are sophisticated, competitive adults.

Live: FTX's Tiny Bank, Massive Corruption at the Highest Levels!

Nobody Special Finance

32.8K subscribers
8,124 views Streamed live on Nov 25, 2022

The story of FTX's purchase of unknown Farmington Bank is proof that the corruption at FTX was not isolated to a few kids running a scam from their penthouse. This involves state and federal regulators at the highest levels! There are more questions than answers, but here is what we know so far.

 

[sharon sanders]

bump this

 

[Emily]

"Nevertheless, it appears that crypto firms may have closer ties to the banking system than
previously understood."

https://www.warren.senate.gov/imo/me...%20updated.pdf
December 7, 2022
The Honorable Michael J. Hsu
Acting Comptroller
Office of the Comptroller of the Currency
550 17th Street SW
Washington, DC 20219

Dear Acting Comptroller Hsu:

We write to express concern regarding recent revelations of ties between the banking industry
and cryptocurrency firms and to inquire about how your agency assesses the risks to banks and
the banking system associated with those relationships.

Earlier this month, FTX, what was once the world’s second-largest crypto exchange valued at
$32 billion,1its sister-company Alameda Research, a crypto trading firm, and 130 other affiliated
companies declared bankruptcy.2 The sudden implosion of the exchange triggered a contagion
that spread across the industry, tanking cryptocurrency values3 and dragging other crypto firms,
into similar fates. Last week, for example, BlockFi, the crypto lending firm once valued at $3
billion,4also declared bankruptcy.5Thankfully, the banking system has been spared of the FTX-
induced turmoil. Despite the industry’s efforts to gain access to the banking system and the
benefits that come with federal recognition from bank regulators, crypto is, so far, not deeply
integrated with the traditional banking system.6

Nevertheless, it appears that crypto firms may have closer ties to the banking system than
previously understood. According to a New York Times report, Alameda, which siphoned $10
billion off the FTX exchange and into its coffers under a scheme coordinated by Sam Bankman-
Fried and other FTX and Alameda executives,7made an $11.5 million investment in Washington
state-based Moonstone Bank, more than double the bank’s worth at the time.8According to a
former president of the Independent Community Bankers of America, “The fact that an offshore
hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its
stated book value should have raised massive red flags for the F.D.I.C., state regulators and the
Federal Reserve...It’s just astonishing that all of this got approved.”9

FTX is not Moonstone Bank’s only crypto connection. In fact, Moonstone’s parent company,
FBH Corp, is headed by the chair of Bahamas-based Deltec Bank, a bank service provider to
Tether, a stablecoin issuer and one of FTX’s largest trading partners.10 According to
Cointelegraph, “After buying the [nearly 100-year-old] bank in 2020, FBH applied for Federal
Reserve approval ... to facilitate cryptocurrency-related transactions. The bank got federal
approval in June 2021, and nine months later, FTX invested in the rural bank, now equipped with
Federal Reserve approval.”11

Moonstone and Deltec are just two of several banks to have their crypto ties come under scrutiny
in the FTX fallout, including Silvergate Capital Corp., Provident Bancorp Inc., Metropolitan
Commercial Bank, Signature Bank, Customers Bancorp Inc., and others.12 Many of these small
banks relied heavily on their crypto customers and are now experiencing heightened volatility. In
the case of Silvergate, crypto deposits accounted for “90% of the bank’s overall deposit base,
amounting to $11.9 billion.”13 Now, average deposits quarter-to-date are downto$9.8 billion.14
Deposits are not the only form of exposure these banks have. In 2020, Provident Bank moved
into crypto by “ma[king] loans supporting crypto-backed lending, margin trading and crypto-
mining operations.”15 Crypto loans accounted for 58% of Provident’s equity capital, totaling
$139 million, but is now experiencing potential losses as high as $27.5 million.16

Banks’ relationships with crypto firms raise questions about the safety and soundness of our
banking system and highlight potential loopholes that crypto firms may try to exploit to gain
further access to banks.17 In the case of Moonstone, FTX’s investment could be “seen as a move
to bypass the requirements of owning a banking license in the U.S.”18 We now know that FTX
also had “accessed regulated banks otherwise out of reach to the crypto exchange” by receiving
customer deposits through Alameda’s bank accounts.19

While the banking system has so far been relatively unscathed by the latest crypto crash, FTX’s
collapse shows that crypto may be more integrated into the banking system than regulators are
aware. To better understand the scope of the banking system’s exposure to the crypto industry
and how banking regulators currently assess crypto-bank relationships, we ask for answers to the
following questions no later than December 21, 2022:

1.In light of recent reporting, do your agencies plan to conduct a review of crypto firms’
relationships with banks?
2.Please describe the process by which your agencies evaluate banks’ relationships with
crypto firms and engage in crypto-related activities.
3.Please specify the number and names of banks regulated by your agency which are
currently engaged in the following activities:
a.Providing cryptocurrency custody services.
b.Holding dollar deposits for crypto-related firms.
i.Of those banks, please specify the number and names of banks that hold
dollar deposits as reserves backing stablecoins.
c.Acting as nodes to verify customer payments.
d.Facilitating stablecoin payment transactions.
e.Providing loans to crypto-related firms.
i.Of those banks, please specify the number and names of banks that accept
digital assets as collateral for loans.
4.For each of the banks listed above, please specify the estimated total dollar volume of the
following activities:
a.Providing cryptocurrency custody services.
b.Holding dollar deposits serving as reserves backing stablecoins.
c.Acting as nodes to verify customer payments.
d.Facilitating stablecoin payment transactions.
e.Providing loans to crypto-related firms.
5.Are banks regulated by your agencies engaging in other crypto-related activities, such as
trading crypto assets or derivatives? If so, please specify the bank(s), the activities they
are engaging in, and the estimated dollar volume of each activity
6.Did Alameda’s investment in Moonstone Bank constitute “control” for the purposes of
the Bank Holding Company Act? If so, did Alameda submit an application to the Federal
Reserve to become a bank holding company?
a.If Alameda’s investment in Moonstone Bank did not constitute “control” for the
purposes of the Bank Holding Company Act, did Alameda receive a formal or
informal “noncontrol” determination from either the Federal Reserve Board or
any Federal Reserve Bank prior to making its investment?
7.What business relationships did Alameda and/or FTX have with Moonstone Bank and/or
its parent holding company?
8.What percentage of Moonstone Bank’s total annual revenues or expenses were generated
from its transactions or business relationships with Alameda and/or FTX?
9.Does your agency know where the funds for Alameda Research’s $11.5 million
investment came from? Is there a risk these funds included FTX customer funds, or came
from assets received from sources that did not meet Know Your Customer (KYC)
guidelines?

Sincerely,
Elizabeth Warren
United States Senator
Tina Smith
United States Senator

 

[Emily]

Watch for small banks moving into holding companies, applying for Federal Reserve membership. (Especially in the SF region.)

https://www.frbsf.org/wp-content/upl...ges_4Q2020.pdf

The bank was already foreign owned before current foreign owners bought it and then got membership in the Federal Reserve System. A British citizen bought it in about 1995. The bank's strange history is in this article.

 

[Emily]

https://nypost.com/2022/12/12/sam-ba...wipe-them-out/
Sam Bankman-Fried’s parents staying in Bahamas, fear his legal fees will ‘wipe them out’
By Thomas Barrabi
December 12, 2022

The law professor parents of disgraced FTX boss Sam Bankman-Fried reportedly fear the family will go broke while paying for his defense against mounting litigation.

Joseph Bankman and Barbara Fried — both well-known figures at Stanford University — have stayed with their ex-billionaire son in the Bahamas for more than a month as he faces a firestorm over FTX’s sudden collapse.

The parents “have told friends that their son’s legal bills will likely wipe them out financially,” the Wall Street Journal reported on Monday, citing sources close to the family.

“We hope this gives us some wisdom,” Bankman recently said, according to those sources. “Otherwise, it would be too hard to take.”
...

As FTX careened toward bankruptcy, Bankman-Fried reportedly contacted his parents seeking advice. Bankman called his colleague, fellow Stanford law professor David Mills, who quickly realized the extent of the trouble.

“Sam needs lawyers, and desperately,” Mills told Bankman, according to the Journal.
...

Despite being nearly broke, Bankman-Fried has hired defense attorney Mark Cohen — who formerly represented convicted sex offender Ghislaine Maxwell — and has sought advice from Mills, who specializes in criminal defense.

Bankman reportedly served as a paid employee at FTX for nearly a year before the company’s collapse. He accompanied his son to key meetings on Capitol Hill and helped guide the firm’s philanthropic efforts...

:banghead::banghead::banghead:

 

[Emily]

SBF is safely back in his parent's CA home. Right now I see SBF as a runaway train. I doubt he had any idea about this aspect to FTX. Just like with the alleged fentanyl money the DEA tracked to the fund.

https://sonar21.com/who-funded-ftx-and-why-that-is-one-of-the-key-issues/

[snipped - E] says

22 November 2022 at 15:00

Question to Larry Johnson: As a former CIA agent, doesn’t this FTX set-up smell of an intelligence operation, masquerading as a financial business? What are the connections to the same people who backed Jeffrey Epstein? Stinks like an intelligence operation to me.
To summarize what has been discovered so far, in the bankruptcy filings:
No record of any bank accounts
No record of any cash accounts
No record of any signatories
No record of any employees
No record of any payables or receivables
No record of any investments
No record of any decision-making
No record of any board meetings
No record of anything
And, as Bryce Weiner adds, there was also no record of any chats which were set to auto-delete, so there is no record of any internal communications.


Reply

• Larry Johnson says
  
  22 November 2022 at 19:34
  
  I think we will learn that British intelligence was heavily involved.

 

[Emily]

https://www.cnet.com/personal-finan...er-sam-bankman-fried-to-enter-plea-next-week/
FTX Co-Founder Sam Bankman-Fried to Enter Plea Next Week
It's unclear whether he'll plead guilty to fraud charges, as his associates did earlier this month, or go to trial.

David Lumb
Dec. 28, 2022 3:11 p.m. PT

...
Samuel Raymond and Andrew Rohrbach have been named as prosecutors in Bankman-Fried's case, court documents show. Among other cases, Raymond handled the seizure of a painting looted by Nazi forces during World War II that was returned to its rightful owners in Ukraine. Rohrbach was one of the prosecutors leading the case against Jeffrey Epstein accomplice Ghislaine Maxwell, who was sentenced to 20 years in prison.

Judge Ronnie Abrams, originally slated to preside over the Bankman-Fried court proceedings, has recused herself after noting that her husband's law firm had advised FTX in 2021. The case has been reassigned to New York Southern District Judge Lewis A. Kaplan, who's taken high-profile cases involving organized crime and art fraud...

 

[Emily]

SBF arriving at the courtroom, per Bloomberg - the greatest, most terrifying show on Earth!

https://twitter.com/unusual_whales/status/1610343332789760000