Crypto Firm FTX Receives FDIC Stop And Forbearance Regarding Insurance

FTX, the crypto exchange controlled by Sam Bankman-Fried, received a cease and desist warning from the Federal Deposit Insurance Corporation on Friday, asking the company to stop “misleading” consumers on the insurance status of their funds.

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The FDIC sent letters to five crypto companies, including FTX US. Unlike deposits held in US banks, cryptocurrencies passed through brokerage houses are not government protected.

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“Based on evidence collected by the FDIC, each of these companies has made false statements – including on their websites and social media accounts – stating or suggesting that certain crypto-related products are FDIC-insured or shares held in brokerage accounts are guaranteed by the FDIC. “said the regulator in a press release.

In addition to FTX US, the FDIC notified Cryptonews.com, Cryptosec.info, SmartAsset.com, and FDICCrypto.com. The FDIC said companies must “take immediate corrective action to address such false or misleading statements.” The agency said knowingly misrepresenting or implying that an uninsured product is FDIC insured is prohibited by the Federal Deposit Insurance Act.

In the letter to FTX, the FDIC said it emerged that on July 20, Brett Harrison, the president of FTX.US, posted a tweet indicating that direct employer deposits are stored in accounts insured by the FDIC on behalf of the user.

Harrison tweeted on Friday that he deleted this post and did not mean that crypto assets stored in FTX are FDIC insured, but rather that “Employers’ USD deposits were held at insured banks.”

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

FTX.US is an American cryptocurrency exchange owned by FTX, which is based in the Bahamas and has largely focused on expanding its business outside of the United States.

The FDIC also said that the SmartAsset and CryptoSec ​​websites identify FTX as an FDIC-insured “cryptocurrency exchange”.

LOOK: Portfolio of Sam Bankfman-Fried

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