Business

Crypto company FTX gets stop and desist from FDIC about insurance coverage

Sam Bankman-Fried, creator and ceo of FTX Cryptocurrency Derivatives Exchange, speaks throughout an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, United States, on Wednesday, Aug 17, 2022.

Jeenah Moon | Bloomberg | Getty Images

FTX, the crypto exchange managed by Sam Bankman-Fried, got a cease-and-desist caution on Friday from the Federal Deposit Insurance Corporation, informing the business to stop “misleading” customers about the insurance coverage status of their funds.

The FDIC released letters to 5 crypto business, consisting of FTX United States. Unlike deposits held at U.S. banks, cryptocurrencies saved with brokerages are not secured by the federal government.

“Based upon evidence collected by the FDIC, each of these companies made false representations —including on their websites and social media accounts — stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured,” the regulator stated in a news release.

In addition to FTX United States, the FDIC informed Cryptonews.com, Cryptosec.information, SmartAsset.com and FDICCrypto.com. The FDIC stated the business should “take immediate corrective action to address these false or misleading statements.” The firm stated intentionally misrepresenting or suggesting that an uninsured item is FDIC-insured is forbidden by the Federal Deposit Insurance Act.

In the letter particularly to FTX, the FDIC stated it appeared that on July 20, Brett Harrison, the president of FTX.US, released a tweet mentioning that direct deposits from companies are saved in FDIC-insured accounts in the user’s name.

Harrison tweeted on Friday that he erased that post and didn’t suggest to show that crypto properties saved in FTX are guaranteed by the FDIC, however rather “USD deposits from employers were held at insured banks.”

“We really didn’t mean to mislead anyone, and we didn’t suggest that FTX US itself, or that crypto/non-fiat assets, benefit from FDIC insurance,” Harrison composed.

FTX.US is a U.S. cryptocurrency exchange owned by FTX, which is based in the Bahamas and has actually been mostly concentrated on developing its service beyond the U.S.

The FDIC likewise stated that the sites for SmartAsset and CryptoSec recognize FTX as an “‘FDIC-insured’ cryptocurrency exchange.”

VIEW: Sam Bankfman-Fried’s portfolio

Blake

News and digital media editor, writer, and communications specialist. Passionate about social justice, equity, and wellness. Covering the news, viewing it differently.

Related Articles

Back to top button