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Unravelling the Moonstone Bank stablecoin gambit

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The curious case of the tiny rural bank with links to FTX and Deltec that’s venturing into the stablecoin market.

A few weeks before the seismic crash of FTX in October, Moonstone Bank partnered with blockchain-based fintech company Fluent Finance on a stablecoin venture to “accelerate crypto adoption by issuing US+ stablecoin.”

The announcement claimed the partnership’s aim is “to connect the traditional financial system to the emerging Web 3 economy” through the issuing and distributing by Moonstone of Fluent’s stablecoin US+.

Fluent Finance CEO Bradley Allgood said the company also plans to eventually bring Moonstone Bank on as a full-node partner, allowing the bank to mint and burn US+.

On the face of it, this seems like a smart move for Fluent to spread the use of its stablecoin and for Moonstone to further its proposed modus operandi of “catering to Small and Medium Enterprises (SMEs) and consumers with technology-driven solutions for consumer and commercial banking.”

A perfect excuse to print and spread more stablecoin. What could go wrong…

Looking a bit closer, however, reveals that the Moonstone Bank has a convoluted and murky history and that when it comes to the partner-behind-the-partner, as is often the case in the digital asset space, all roads lead to Tether.

The strange history of Moonstone

The history of the small, rural bank in Washington state that’s now dipping its toe into the stablecoin world is intriguing.

Originally called Farmington Bank, it was bought in 1995 by Archie Chan, a British citizen residing in Hong Kong. He appears to have been interested in a chartered Washington bank that might become a platform for international banking, and though this aim never came true in his lifetime (Chan died in 2010), the new owners appear to be set on the same goal.

Chan’s widow sold Farmington in 2020 to a Maryland holding company called GUVJEC Investment Corporation, whose president is none other than Jean Chalopin, the chairman of Deltec.

Shortly after the purchase, GUVJEC was renamed FBH Corporation, and in 2022, Farmington was rebranded as Moonstone Bank, along with a pivot to digital currency and international payments—Archie Chan’s international banking dream was finally realized.

Jean Chalopin is now a director of Moonstone, and his son Janvier Chalopin is the CEO of the bank.

The web of crypto-coincidences doesn’t end here. A week after taking on the name ‘Moonstone,’ on March 7, 2022, the bank received an infusion of $11.5 million, which at the time was more than double its entire net worth. This ‘unexpected’ money injection came from Alameda Research, the notorious investment arm and market maker of FTX.

Alameda also happened to be, along with Tether, one of the main customers of Deltec.

In November 2022, a report by crypto news site Protos noted that Moonstone Bank (formerly Farmington) had “consistently reported deposits hovering around $10 million for decades,” but reported $84 million in deposits in the third quarter of 2022—$71 million were from just four new accounts.

Whether this sudden influx of funds is related to FTX’s collapse, Deltec, or both is a matter of speculation, but it does at least suggest the solidity and origin of the finances of this future node of US+ “stablecoin” are worth looking into.

Some of these questions have already been asked, notably in a New York Times article from November examining the bank’s links to FTX. The story quoted banking industry consultant Camden Fine, who said: “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.”

When unraveling the interests behind this new US+ stablecoin venture, it’s also worth considering the other major partner involved, Fluent Finances.

A bridge too far

Fluent Finance markets itself as a federated, bank-led U.S. Dollar stablecoin with “fully auditable 1:1 reserves” and that US+ is “the world’s most trustworthy, most stable stablecoin.”

The company’s three directors are Bradley Allgood, Oliver Gale, and Jaime Plata.

Oliver Gale is famed as the self-described “inventor” of the central bank digital currency (CBDC) and the name behind the Eastern Caribbean Digital Dollar, while Jaime Plata has worked as a “strategic advisor” to the Eastern Caribbean Central Bank, where he collaborated with Gale on digital dollar projects.

This experience in the CBDC area is relevant as one of the stated goals of Fluent Finance’s US+ stablecoin is to act as a “technological bridge, connecting legacy banking systems and digital finance.”

In this equation, Moonstone Bank would be the legacy banking system, but who are the digital finance players at the other end of the bridge? Alameda might have been one, and the bank’s connections to Deltec hint at another controversial digital asset behemoth.

Twisted web

The Bahamas-based Deltec Bank is known for being the home of the reserves guaranteeing the so-called “stablecoin” Tether.

Tether is the largest stablecoin by circulation. Almost every digital asset exchange uses it as a tool for integrating new money, managing and growing liquidity, leveraged trading, and pricing digital assets. As such, a huge portion of the digital asset ecosystem, including BTC, Ethereum, and most major exchanges, rely on the claim that 1 USDT is always backed by 1 U.S. dollar (or equivalent asset).

However, in 2019 Tether LTD was sued, along with sister company Bitfinex, by the New York Attorney General Leticia James, who suggested Tether was printing unbacked money to cover up an $850 million loss suffered by Bitfinex. The case was settled in 2021, but the agreement notes that Tether didn’t have the reserves to back the stablecoins in circulation for periods of time.

Tether’s bank, Deltec, has a neighbor in the Bahamas who’s been making a lot of the headlines recently, FTX. The company is currently undergoing a Chapter 11 bankruptcy proceeding, with its former CEO Sam Bankman-Fried out on bail (posted for $250 million) after being arrested and charged with several crimes, notably conspiracy to commit fraud and money laundering.

This is the same FTX who, through its investment arm Alameda, paid $11 million into Moonstone Bank, one of whose directors happens to be the chairman of Deltec and whose son is the CEO of Moonstone, a bank whose accounts rose dramatically after its takeover by GUVJEC and which could soon be printing US+ stablecoin.

So, to be clear, controlling interests in Deltec are now also amongst the controlling interests in Moonstone Bank, meaning both entities now have ties to Tether and US+ stablecoins.

Suppose the post-takeover deposits of $71 million into Moonstone Bank, that came from four new accounts, happened to be linked to Deltec, whose main customer is Tether. In that case, any issues with Tether could potentially cause a chain reaction from Deltec down to Moonstone, which is also the newest member of Fluent’s US+ stablecoin ecosystem.

It seems that the fate of Moonstone bank is hard to separate from that of Deltec, whose own fate is inextricably linked to Tether.

What this means for the prospective success or failure of Moonstone’s stablecoin venture with Fluent Finance is hard to guess, but what does appear depressingly apparent is that several more supposedly independent companies have joined the ever-growing congregation betting their financial futures on faith in the balance books of Tether and Deltec—much increasingly depends on those books being fact, not fiction.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance,, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

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