Crypto firm FTX receives FDIC warning to stop ‘misleading’ consumers over deposit protection

Sam Bankman-Fried, Founder and Managing Director of FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, U.S., Wednesday, August 17, 2022.

Jeena Moon | Bloomberg | Getty Images

FTX, the crypto exchange controlled by Sam Bankman-Fried, received a cease and desist warning from the Federal Deposit Insurance Corporation on Friday, asking the company to stop “misleading” consumers on the insurance status of their funds.

The FDIC letters issued to five crypto companies, including FTX US. Unlike deposits held in US banks, cryptocurrencies stored with brokerages are not government protected.

“Based on evidence collected by the FDIC, each of these companies has made false statements – including on their websites and social media accounts – stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC insured,” the regulator said in a press release.

In addition to FTX US, the FDIC notified,,, and The FDIC said companies should “take immediate corrective action to address such false or misleading statements.” The agency said knowingly misrepresenting or implying that an uninsured product is FDIC insured is prohibited by the Federal Deposit Insurance Act.

In the letter specifically addressed to FTX, the FDIC said it appeared that on July 20, Brett Harrisonthe president of FTX.US, posted a tweet stating that direct deposits from employers are stored in FDIC-insured accounts in the user’s name.

Harrison tweeted on Friday that he had deleted this post and did not mean that crypto assets stored in FTX are FDIC insured, but rather that “Employers’ USD deposits were held at insured banks.”

“We really didn’t mean to mislead anyone, and we didn’t suggest that FTX US itself, or crypto/non-fiat assets, have FDIC insurance,” Harrison wrote.

FTX.US is an American cryptocurrency exchange owned by FTX, which is based in the Bahamas and has largely focused on expanding its business outside of the United States.

The FDIC also said that the SmartAsset and CryptoSec identify FTX as an “FDIC-insured” cryptocurrency exchange.”

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