FDIC Issues Cease And Dessist Letters To FTX.US Over False Representations
- The Federal Deposit Insurance Corporation (FDIC) issued a cease-and-desist warning to the United States division of the renowned crypto exchange platform FTX, FTX.US.
- The agency collected evidence hinting that each of the five exchanges failed in making correct representations, including on their websites and social media accounts.
On Friday, the Federal Deposit Insurance Corporation (FDIC) issued a cease-and-desist warning to the United States division of the renowned crypto exchange platform FTX, FTX.US, instructing the company to stop “misleading” users about the deposit protection of their funds.
The regulatory body issued letters to five crypto exchange platforms, including FTX US. Notably, the cryptocurrency tokens stored with brokerages are not protected by the U.S. government.
According to the FDIC, it collected evidence hinting that each of the five exchanges failed in making correct representations, including on their websites and social media accounts. The agency said that the exchanges made false representations by “stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.”
The FDIC also warned Cryptonews.com, Cryptosec.info, SmartAsset.com, and FDICCrypto.com exchanges, in addition to FTX US to address these incorrect or misleading assertions, the companies must “take immediate corrective action,” according to the FDIC.
The letter reads:
“The Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured product is FDIC–insured or from knowingly misrepresenting the extent and manner of deposit insurance. The FDI Act further prohibits companies from implying that their products are FDIC–insured by using “FDIC” in the company’s name, advertisements, or other documents. The FDIC is authorized by the FDI Act to enforce this prohibition against any person.”
The FDIC claimed in a letter sent particularly to FTX that it seemed Brett Harrison, the president of FTX.US, tweeted on July 20 that direct deposits from employers are kept in FDIC-insured accounts in the user’s name.
Reacting to the recent warning, Harrison said in a tweeted that he had now deleted the post and that he had intended to say instead that “USD deposits from employers were held in insured banks,” not that cryptocurrency assets stored in FTX are backed by the FDIC.
“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,”
He stated.
Moreover, the FDIC further stated that the SmartAsset and CryptoSec’s websites wrongfully identify FTX as an” ‘FDIC-insured’ cryptocurrency exchange.”
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
