Key Takeaways
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The FDIC says, “These statements appear to contain false and misleading representations that uninsured products are insured by the FDIC, as well as false and misleading statements about the extent of the manner of protection provided by the FDIC deposit insurance and misuse of the FDIC name.
The Federal Deposit Insurance Corporation (FDIC) has issued a cease-and-desist order to crypto exchange giant FTX.US for allegedly making false statements.
The financial regulator stated, in a new press release, that FTX.US allegedly made statements implying that the products they offer are FDIC-insured.
According to the FDIC, FTX.US President Brett Harrison misled the public in July when he claimed in a tweet that "direct deposits from employers to FTX.US are stored in individual FDIC-insured bank accounts in the users' names” and "stocks are held in FDIC-insured and SIPC-insured brokerage accounts."
The FDIC says,
“These statements appear to contain false and misleading representations that uninsured products are insured by the FDIC, as well as false and misleading statements about the extent of the manner of protection provided by the FDIC deposit insurance and misuse of the FDIC name.
In fact, FTX.US is not FDIC-insured, the FDIC does not insure any brokerage accounts, and FDIC insurance does not cover stocks or cryptocurrency.”
On the other hand, FDIC deposit insurance refers to the security provided to clients in the unlikely event that an FDIC-insured institution fails. FDIC does not insure stocks or cryptocurrency but only covers deposits held in insured banks and savings associations.
The regulatory agency is mandating FTX to take corrective action, including removing all false statements insinuating they are insured by the FDIC, not making such statements again, and showing that they met the specified requirements within 15 days.
Similar letters from the FDIC were sent to four additional crypto-related businesses, including Cryptonews.com, Cryptosec.info, SmartAssess.com, and FDICCrypto.com.
