Crypto News

FTX US Spread False or Misleading Statements About FDIC-insured Products, Regulator Says

On August 19, The Federal Deposit Insurance Corporation (FDIC) issued varied stop and desist letters to 5 cryptocurrency firms together with FTX US, owned by the crypto billionaire Sam Bankman-Fried, together with information shops Cryptonews.com, Cryptosec.information, SmartAsset.com, and the location FDICCrypto.com.

The FDIC requested the aforementioned firms to stop making “false or misleading statements” relating to their relationship with the FDIC.

According to the FDIC, FTX US and the opposite firms mentioned that sure cryptocurrency-related merchandise or providers they supplied had been FDIC-insured.

One such company even deceptively registered a site the place it “suggests affiliation with or endorsement by the FDIC,” an exercise that’s completely prohibited by The Federal Deposit Insurance Act (FDI Act). FDICCrypto.com redirects to a web site that gives a wide range of providers, together with a cryptocurrency service provider.

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One of the “crypto services” supplied FDICCrypto.com included bodily crypto payments. Source: Chsserviceprovider

FTX Us May Have Violated the Federal Deposit Insurance Act

According to the FDIC, FTX US and its associated entities might have violated FDIC legal guidelines by making “false and misleading statements, directly or by implication, concerning FTX US’s deposit insurance status.”

Apparently, on July 20, 2022, Brett Harrison, president of FTX US, tweeted on his official account stating that direct deposits from the company’s staff had been saved in individually FDIC-insured financial institution accounts. His precise phrases, as quoted by the FDIC, had been:

“Direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the user’s names,” … “stocks are held in FDIC-insured and SIPC-insured brokerage accounts.”

In addition, the FDIC indicated that FTX.US introduced itself as an “FDIC-insured” cryptocurrency alternate on the SmartAsset.com web site and on CryptoSec.Info.

Brett Harrison: “Happy To Work Directly With the FDIC”

The FDIC clarified that it doesn’t insure any sort of brokerage account and doesn’t cover any form of shares or cryptocurrencies. Hence, the data promoted by FTX US is completely false, so they may take authorized motion in opposition to the alternate for misusing FDIC’s identify.

Therefore, FTX US has 15 business days from the publication of the discharge to supply a written letter to the FDIC displaying compliance with the requests made, detailing all efforts made to take away all materials linking them to the FDIC. Failure to adjust to the request might consequence within the alternate going through additional authorized motion.

Similarly, Cryptonews.com obtained a stop and desist letter from the FDIC for publishing false evaluations of cryptocurrency exchanges equivalent to Coinbase, Gemini, and eToro, noting that they’re regulated and insured by the FDIC.

Brett Harrison, President of FTX US, acknowledged earlier as we speak that he certainly wrote the tweet and clarified that he deleted it upon request by the FDIC. Harrison later added that FTX US acted in good religion and emphasized the alternate’s dedication to work hand in hand with American regulators:

Tweets by FTX US President Brett Harrison. Source: Twitter
Source: Twitter
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