FDIC asks FTX.US to remove false claims about deposit insurance

FDIC asks FTX.US to remove false claims about deposit insurance


2022-08-21 14:47:40

The FDIC asked FTX.US and four other crypto companies to stop making “false and misleading statements” about federal deposit insurance.

FDIC asks FTX.US to remove false claims about deposit insurance

The Federal Deposit Insurance Corporation (FDIC) has issued a directive FTX US, Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com immediately correct misleading claims.

Accordingly, FIDC has accused the above platforms of providing false information, “misleading” investors when announcing their accounts are insured by government agencies.

The regulator said:

“The Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured product falls under the protection of the FDIC or knowingly misrepresents the extent and manner of deposit insurance.

The FDI Act further prohibits companies from implying that their products are FDIC-insured by using ‘FDIC’ in company names, advertisements or other materials.”

The move is the latest public action by the FDIC to target depository insurance claims. Late last month after Voyager broke down, the FDIC issued a statement stating that crypto companies will not be covered by federal depository insurance.

The FDIC also issued a similar letter to Voyager, demanding that “crypto broker Voyager Digital cease and desist from making false, misleading statements regarding FDIC deposit insurance status and immediately immediately corrects any similar previous statements.”

In the case of FTX.US, the letter also cited a tweet from FTX.US President Brett Harrison claiming direct deposits from employers to FTX and stock held in FDIC-insured accounts dangerous. FIDC also provides evidence SmartAsset.com once listed FTX as an FDIC-guaranteed exchange.

The notice states:

“In fact, FTX.US is not FDIC insured and FDIC does not insure any brokerage accounts and stocks or cryptocurrencies are not underwritten either. FTX.US has 15 days to provide written verification that it has complied with the requirements.”

Soon after, FTX.US president Harrison tweeted in response:

“We really don’t intend to mislead anyone and we are not suggesting that FTX US itself, or crypto/non-fiat assets, benefit from FDIC insurance. I hope this provides clarity on our intentions. It is a pleasure to work directly with the FDIC on these important topics.”

FTX CEO Sam Bankman-Fried also eagerly spoke up:

“FTX has no FDIC insurance (and we never said so on the website…). We never misrepresent and apologize if someone has misunderstood.”

SmartAsset CEO and co-founder Michael Carvin also gave an update:

“We are in contact with the FDIC to assess the issue and have removed the requested problematic content in the meantime.”

Former FDIC already put crypto risk assessment on its 2022 priority list, and last October, former president Jelena McWilliams said the agency is focused on creating “clear guidance” for the intersection. of cryptocurrencies and banking.

However, the road has become more thorny with the recent sharp words of Senator Pat Toomey. In one Letters 17, to FDIC Acting President Martin Gruenberg, Toomey said the agency “may be acting improperly to prevent banks from doing business with legitimate crypto-related companies.”

Also this week, the Fed published new guidelines for crypto banks. Accordingly, institutions that are not federally insured by the FDIC will face more scrutiny.

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