FTX US Lied About FDIC-Insured Products

FTX US lied about FDIC-insured products, according to the Federal Deposit Insurance Corporation (FDIC), which sent separate stop and desist letters to five crypto firms, including FTX US, owned by Sam Bankman-Fried, as well as news sites Cryptonews.com, Cryptosec.info, SmartAsset.com, and the website FDICCrypto.com. The letters were sent on August 19.

FTX US Lied About FDIC-Insured Products

The FDIC has requested that the aforementioned firms stop making false or misleading claims about their connection with the FDIC.

The FDIC stated that FTX US and the other entities provided FDIC-insured cryptocurrency-related items or services.

One such firm even falsely registered a domain that “suggests association with or endorsement by the FDIC,” which is a completely illegal practice under the Federal Deposit Insurance Act (FDI Act). FDICCrypto.com leads to a website that provides a number of services, including cryptocurrency services.

FTX May Have Violated Federal Deposit Insurance Act

According to the FDIC, FTX US and its connected organizations may have violated FDIC statutes by making false and misleading claims, directly or indirectly, about FTX US’s deposit insurance status.

Brett Harrison, president of FTX US, apparently tweeted on his official account on July 20, 2022, indicating that direct deposits from the company’s employees were deposited in personally FDIC-insured bank accounts. According to the FDIC, his precise remarks were:

“Direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the user’s names,” … “stocks are held in FDIC-insured and SIPC-insured brokerage accounts.”

Furthermore, the FDIC stated that FTX.US advertised itself as a “FDIC-insured” cryptocurrency exchange on the SmartAsset.com and CryptoSec.Info websites.

Brett Harrison Is Happy To Work With FDIC

The FDIC reiterated that it does not insure brokerage accounts and does not cover stocks or cryptocurrencies. As a result, the information presented by FTX US is completely untrue, and the FDIC may take legal action against the exchange for abusing the FDIC’s name.

As a result, FTX US has 15 business days from the date of the release to furnish the FDIC with a written statement demonstrating compliance with the demands made and describing all efforts made to remove all material tying them to the FDIC. Failure to comply with the request may result in further legal action being taken against the exchange.

Similarly, the FDIC sent a stop and desist letter to Cryptonews.com for posting misleading ratings of cryptocurrency exchanges such as Coinbase, Gemini, and eToro, despite the fact that they are licensed and insured by the FDIC.

Brett Harrison, President of FTX US, confirmed earlier today that he did write the tweet and emphasized that he deleted it in response to the FDIC’s request. Harrison later clarified that FTX US operated in good faith and stressed the exchange’s willingness to collaborate with American regulators.

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