The Federal Deposit Insurance Corporation (FDIC) has sent a cease and desist letter to five companies, including crypto exchange FTX US. CEO Sam Bankman-Fried explained that FTX is not FDIC insured, stating, “We never meant to say otherwise, and we apologize if anyone misinterpreted that… to be clear that FTX US is not insured by the FDIC”.
FDIC orders 5 companies to cease and desist
The Federal Deposit Insurance Corporation (FDIC) issued crypto-related cease and desist orders to five companies on Friday. The agency regulates and insures the deposits of FDIC-insured community banks and other financial institutions.
The letters demand that the five companies and their officers “stop making false and misleading statements about FDIC deposit insurance.” They must also “take immediate corrective action to address such false or misleading statements.”
The five companies are FTX US, Cryptonews.com, Cryptosec.info, Smartasset.com and FDICCrypto.com.
The FDIC detailed:
Each of these companies made false statements, including on their websites and social media accounts, stating or suggesting that certain crypto-related products are insured by the FDIC or that shares in brokerage accounts are insured by the FDIC.
According to the FDIC, Cryptonews.com has reviews on its website that claim cryptocurrency trading platforms Coinbase, Etoro, and Gemini are insured by the FDIC. Cryptosec.info and Smartasset.com provide a list of FDIC-insured crypto exchanges that include Crypto.com, Luno, Robinhood, and Voyager. Meanwhile, FDICCrypto.com brazenly registered a website with FDIC in its domain name.
FTX ordered US to cease and desist
FTX US is one of the crypto companies that received a cease and desist letter from the FDIC.
Although FTX and FTX US are two separate trading platforms, they are both founded by Sam Bankman-Fried, who is currently the CEO of both companies. Global FTX exchange does not allow US residents to trade on their platform.
Bankman-Fried apologized for the confusion over FDIC insurance on Twitter. “Clear communication is really important; sorry!” he tweeted. “FTX is not FDIC insured (and we’ve never said so on the website, etc.); the banks we work with. We’ve never meant otherwise, and we apologize if anyone misinterpreted that” . In a follow-up tweet, he stressed: “To be clear, FTX US is not insured by the FDIC.”
This was not the first time the FDIC took action against crypto companies. The regulator and the Federal Reserve Board issued a letter to Voyager Digital last month demanding the crypto lender stop making false or misleading representations about its deposit insurance status. Voyager filed for bankruptcy last month.
What do you think about the FDIC issuing crypto-related cease and desist orders to five companies? Let us know in the comments section below.
Kevin Helms
An Austrian economics student, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.
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