- The Federal Deposit Insurance Corp. (FDIC) sent cease-and-desist letters to five companies Friday, claiming the firms made false and misleading crypto-related claims about deposit insurance.
- The companies — FTX US, Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com — falsely suggested on their websites and social media accounts that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.
- The letters follow a similar notice the regulator sent to Voyager Digital last month. That cease-and-desist order demanded the bankrupt crypto platform stop making inaccurate claims that customer-held crypto assets were protected by the government.
In its letter to the crypto exchange FTX US, which is owned by billionaire Sam Bankman-Fried, the FDIC said a now-deleted tweet from FTX President Brett Harrison falsely stated that FTX and the funds invested by users are insured by the regulator.
Harrison’s tweet, published July 20, stated “[d]irect deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names,” according to the FDIC.
Harrison, responding to the FDIC letter on Twitter, said FTX “really didn’t mean to mislead anyone.”
“[W]e didn’t suggest that FTX US itself, or that crypto/non-fiat assets, benefit from FDIC insurance,” he wrote. “I hope this provides clarity on our intentions. Happy to work directly with the FDIC on these important topics.”
In a series of tweets Friday, Bankman-Fried issued his own response to the regulator’s letter.
“FTX does not have FDIC insurance (and we've never said so on website etc.); banks we work with do,” he wrote. “We never meant otherwise, and apologize if anyone misinterpreted it. … We're also excited to explore potential ways that individual accounts using direct deposit (which we now support) could, in the future, be used to further protect customers, and would be excited to work with the FDIC on that, but to be clear FTX US isn't FDIC insured.”
The FDIC, in its letters to Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com, said the sites published false or misleading statements about crypto firms.
SmartAsset.com, for instance, featured a now-deleted article titled, “List of FDIC-Insured Crypto Exchanges,” the FDIC said.
“[W]ith those [purportedly insured] exchanges, if you lose your money on deposit, the FDIC will reimburse those losses up to the program’s cap,” the article stated, according to the FDIC.
The regulatory crackdown on companies and executives accused of making false crypto-related claims about deposit insurance comes amid a period of high volatility in the cryptocurrency space.
Reeling from a “crypto winter,” several digital-asset firms have filed for bankruptcy as the value of digital assets has plunged in recent months.
Like Voyager, crypto lender Celsius filed for bankruptcy in July, a month after freezing customer assets.