Farmington State Bank in Farmington, Wash., which is in the midst of selling itself to Bank of Eastern Oregon, was hit with a cease-and-desist order from regulators.
The Fed said in a press release that the $22 million-asset bank “improperly changed its business plan without notifying … supervisors and obtaining prior approval for those changes.”
The Fed said its action ensures that the wind down will occur in a way that protects depositors and the Deposit Insurance Fund. The action bars Farmington and its holding company from making dividends or capital distributions, dissipating cash assets and engaging in certain activities without regulatory approval.
The action was taken jointly with the Washington State Department of Financial Institutions.
Farmington gained notoriety when it rebranded as Moonstone Bank and began dealing in crypto. It was later disclosed that the bank had received an $11.5 million investment from an affiliate of failed crypto firm FTX.
The bank eventually scrapped the Moonstone brand and got out of the crypto business. The bank agreed in January to sell certain assets and deposits to Bank of Eastern Oregon in a deal that is expected to close later this month.