Remove that insulation at once! It is a fire hazard blocking airflow!
Fix the house and the cold air will come in elsewhere.
First of all, insulation insulates--it does not stop cold air. Furnace filters made of insulation pass >2,500 CFM. In addition to insulation, you need Air Sealing. Walls don't leak until you put holes in them. Let's look at why cold air is coming in instead of warm air leaking out.
If you open a window, the factor that determines whether cold air infiltrates or warm air exfiltrates is pressure gradients. If there is a higher pressure outside or a lower pressure inside, cold air will seep in. Its up to you if you want to control where it comes in but the house is telling you it needs air. If you don't control the entry point, it will seek the path of least resistance, which in your case happens to be at the Fp.
Try this experiment; Open a basement window and see if you're still getting cold air in. Also, see my recent post about the smoke getting into the basement.
HTH