The Federal Deposit Insurance Corporation (FDIC) has sent a cease and desist letter to five companies, including the FTX US crypto exchange. CEO Sam Bankman-Fried explained that FTX does not have FDIC insurance, stating, “We never meant otherwise, and we apologize if anyone misinterpreted it… to be clear, FTX US is not FDIC insured.”
FDIC orders 5 companies to cease and desist
On Friday, the Federal Deposit Insurance Corporation (FDIC) issued crypto-related cease and desist orders to five companies. The agency regulates and insures the deposits of community banks and other FDIC-insured financial institutions.
The letters demand that the five companies and their officers “cease and desist from making false and misleading statements about FDIC deposit insurance.” They must also “take immediate corrective action to remedy such false or misleading statements.”
The five companies are FTX US, Cryptonews.com, Cryptosec.info, Smartasset.com and FDICCrypto.com.
The FDIC detailed:
Each of these companies has made false claims – 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 insured. by the FDIC.
According to the FDIC, Cryptonews.com has reviews on its website claiming that the Coinbase, Etoro, and Gemini crypto trading platforms are FDIC insured. Cryptosec.info and Smartasset.com provide a list of FDIC-insured crypto exchanges which includes Crypto.com, Luno, Robinhood, and Voyager. Meanwhile, FDICCrypto.com blatantly registered a website with the FDIC in its domain name.
FTX US ordered to cease and desist
FTX US is one of the crypto companies that received a cease and desist letter from the FDIC.
Although FTX and FTX US are two separate trading platforms, they are both founded by Sam Bankman-Fried, who is currently the CEO of both companies. The global exchange FTX does not allow US residents to trade on its platform.
Bankman-Fried apologized for the FDIC insurance confusion on Twitter. “Clear communication is really important; Sorry!” he tweeted. “FTX does not have FDIC insurance (and we never said so on website etc); the banks we work with do. We never meant to say otherwise, and we apologize if anyone misinterpreted it. In a follow-up tweet, he pointed out, “To be clear, FTX US is not FDIC insured.”
This wasn’t the first time the FDIC has taken action against crypto companies. The regulator and the Federal Reserve Board Published a letter to Voyager Digital last month asking the crypto lender to cease and desist from making false or misleading statements about deposit insurance status. Traveling asked bankruptcy protection last month.
What are your thoughts on the FDIC issuing crypto-related cease-and-desist orders to five companies? Let us know in the comments section below.
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