The Federal Deposit Insurance Corporation (FDIC) is hitting crypto exchange giant FTX.US with a cease-and-desist order over allegedly making false statements.
According to a new press release issued by the financial regulator, FTX.US has supposedly made statements that make it appear as if the products they offer are FDIC-insured.
[adinserter block="1"]The FDIC says that FTX.US president Brett Harrison made the misleading statements in July over his Twitter account when he said 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.”
Says the FDIC,
“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.
These false and misleading statements represent or imply that FTX.US is FDIC-insured, that funds deposited with FTX.US are placed, and at all times remain, in accounts at unnamed FDIC-insured banks, that brokerage accounts at FTX.US are FDIC-insured, and that FDIC insurance is available for cryptocurrency or stocks.
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.”
FDIC deposit insurance refers to the protection granted to customers in the unlikely scenario that an FDIC-insured institution fails.
The regulatory body is demanding that FTX.US takes corrective actions, such as removing all false statements that imply they are insured by the FDIC, never making such statements again and proving within 15 days that they met these requirements.
Four other crypto-related firms received similar letters from the FDIC, including Cryptonews.com, Cryptosec.info, SmartAssess.com and FDICCrypto.com.
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