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FTX US Spread false or misleading claims about FDIC-insured products, Regulator says

The FDIC sent acease and desist letters to FTX and other crypto companies for spreading false or misleading statements.

On August 19, the Federal Deposit Insurance Corporation (FDIC) issued multiple cease and desist letters against five crypto companies including FTX US, which is owned by the crypto billionaire from Sam Bankman-Fried, along with news sites Cryptonews.com, Cryptosec.info, SmartAsset.com, and the FDICCrypto.com site.

The FDIC has asked the aforementioned companies to stop making “false or misleading statements” about their relationship with the FDIC.

According to the FDIC, FTX US and other companies said some of the crypto-related products or services they offer were insured by the FDIC.

One such company even fraudulently registered a domain that it “suggests to be affiliated with or endorsed by the FDIC,” an activity that is outright prohibited by the Federal Deposit Insurance Act (the Federal Deposit Insurance Act). FDI). FDICCrypto.com redirects to a website that offers a variety of services, including a cryptocurrency service provider.

FTX We may have violated the Federal Deposit Insurance Act

According to the FDIC, FTX US and its related entities may have violated FDIC law by making “false and misleading statements, either directly or by implication, regarding FTX’s deposit insurance status US”.

Apparently, on July 20, 2022, Brett Harrison, president of FTX US, tweeted on his official account that direct deposits from company employees are stored in bank accounts individually insured by the FDIC. His exact words, quoted by the FDIC, were:

“Direct employer deposits into FTX US are stored in each FDIC-insured bank account in the name of the user,”… “stocks are held in FDIC-insured brokerage accounts insurance and SIPC insurance.”

Additionally, the FDIC points out that FTX.US presents itself as an “FDIC-insured” cryptocurrency exchange on the SmartAsset.com website and on CryptoSec.Info.

Brett Harrison: “Happy to work directly with FDIC”

The FDIC has clarified that it does not insure any type of brokerage account and does not cover any type of stock or cryptocurrency. Therefore, the information promoted by FTX US is completely untrue, so they can take legal action against the exchange for abusing the name of the FDIC.

As a result, FTX US has 15 business days from the date of disclosure to provide a written letter to the FDIC demonstrating compliance with the requirements set forth, detailing all efforts made. now to delete all documents linking them to the FDIC. Failure to comply with the request may result in the exchange facing further legal action.

Similarly, Cryptonews.com received cease and desist letters from the FDIC for publishing misleading reviews of crypto exchanges such as Coinbase, Gemini, and eToro,
note that they are regulated and insured by the FDIC.

Brett Harrison, President of FTX US, acknowledged earlier today that he actually wrote the tweet and clarified that he deleted it at the request of the FDIC. Harrison then added that FTX US acted in good faith and emphasized the exchange’s commitment to working with US regulators:

Brett Harrison, President of FTX US.
Brett Harrison, President of FTX US.

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