Crypto Exchange FTX Ordered to Halt 'False and Misleading' Claims by US Bank Regulator

The bank regulator issued a similar cease and desist letter to bankrupt crypto firm Voyager Digital.

By Reuters | Updated: 20 August 2022 09:44 IST

Crypto Exchange FTX Ordered to Halt 'False and Misleading' Claims by US Bank Regulator

The FDIC said a July tweet by the head of FTX's US operations contained misleading claims

Highlights

FTX CEO Sam Bankman-Fried emphasised FTX is not FDIC-insured
Bankman-Fried apologised if anyone misinterpreted previous comments
Order comes as regulators have ramped up efforts to police crypto firms

A US bank regulator ordered crypto exchange FTX on Friday to halt what it called "false and misleading" claims the exchange had made about whether funds at the company are insured by the government. The Federal Deposit Insurance Corporation said a July tweet by Brett Harrison, head of FTX's US operations, contained misleading claims that funds held at and stocks purchased through FTX were FDIC insured, and ordered the company to remove any misleading language from its social media accounts and websites.

In the tweet, which Harrison has since deleted, he stated that direct deposits from employers to the crypto exchange are “stored in individually FDIC-insured bank accounts” and that stocks purchased via FTX US “are held in FDIC-insured” brokerage accounts. The FDIC said in its cease and desist letter to FTX US that those statements implied that FDIC insurance was available for cryptocurrency and stock holdings, and that the agency does not insure brokerage accounts.

In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasised FTX is not FDIC-insured, and apologised if anyone misinterpreted previous comments.

[Sponsored] Samsung Galaxy S24: The Ultimate Camera Phone With Smarter On-Device AI

The order, one of five sent to crypto firms by the FDIC on Friday, comes as regulators have ramped up efforts to police crypto firms that may be misleading investors on whether their funds enjoy a government backstop. The issue has come to a head of late, as turmoil in the crypto market has led to stress and the collapse of some high profile firms.

The bank regulator issued a similar cease and desist letter to bankrupt crypto firm Voyager Digital, arguing that the company had misled customers by claiming their funds with Voyager would be covered by the FDIC. Later, the FDIC issued an advisory urging banks dealing with crypto companies to ensure that customers are aware of what types of assets are government-insured, particularly in cases where firms offer a mix of uninsured crypto products alongside insured bank deposit products.

Tether Says Reserves Fell $16 Billion in Q2 Driven by Crypto Meltdown

© Thomson Reuters 2022

Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.