Crypto exchange FTX ordered to stop ‘false and misleading’ claims by US bank regulator

Crypto Exchange FTX Ordered to Halt

A US bank regulator on Friday ordered crypto exchange FTX to stop “false and deceptive” claims that the exchange has claimed the company’s funds are government insured or not. The Federal Deposit Insurance Corporation said a July tweet by FTX’s head of US operations, Brett Harrison, contained misleading claims that funds and stocks purchased through FTX were FDIC insured, and that the company was asked to remove any deceptive language from its social media accounts. Ordered the removal of more websites.

In the tweet, which Harrison deleted, he said that direct deposits from employers to the crypto exchange are “stored in personally FDIC-insured bank accounts” and that stocks purchased through FTX US are in “FDIC-insured” brokerage accounts. are kept. The FDIC said in its cease-and-desist letter to FTX US that those statements imply that FDIC insurance was available for cryptocurrency and stock holdings, and that the agency does not insure brokerage accounts.

In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasized that FTX is not FDIC-insured, and apologized if anyone misinterpreted previous comments.

The order, one of five sent by the FDIC to crypto firms on Friday, comes as regulators intensify efforts to police crypto firms that may mislead investors as to whether their funds enjoy government backstops. The issue has come to the fore of late, as the turmoil in the crypto market has caused tension and the collapse of some high profile firms.

The bank regulator issued a similar cease-and-desist letter to bankrupt crypto firm Voyager Digital, arguing that the company had misled customers that their funds with Voyager would be covered by the FDIC. Later, the FDIC issued an advisory asking banks dealing with crypto companies to ensure that customers are aware of what types of assets are government insured, particularly in cases where the firm offers insured bank deposit products. as well as offer a mix of uninsured crypto products.

© Thomson Reuters 2022


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