FTX owned this company:
Alemada Research bought a one-branch bank for $11.5 million and it looks like…..this. How did regulators miss this? Is committing fraud as easy as buying a bank?
It helps to be protected by The Swamp. Or Sewer.
Usually, it is a lenghth process to buy a bank.
It helps to be protected by The Swamp. Or Sewer.
Usually, it is a lenghth process to buy a bank.
Yet anyone with a lick of sense would have known that as a bank operating without deposit insurance or effective US regulatory oversight, FTX was vulnerable to losses and potential failure due to bad investments, mismanagement, or fraud. This no doubt held back many cautious potential investors and depositors in FTX.
As losses mounted, a gusher of new money was needed by FTX, so having Alameda Research buy an existing small bank in the US makes sense as the opening move toward getting federal regulatory approval to invest FDIC insured bank deposits in crypto. Once granted, that approval would have permitted FTX and Alameda Research to channel deposits through the bank, thereby making them federally insured.
The fly in that ointment is that unless a political fix was imposed by the Biden administration or by new legislation enacted by Congress, the FDIC's career accountants and lawyers would not have approved such a scheme. In effect, it would have put the US taxpayers on the hook to make good much of the losses by FTX and Alameda.
As investigators, lawyers, and journalists pick over the FTX mess, we will eventually learn just what was going on with the bank purchase, but that is my guess.