Monday, February 6, 2023
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FDIC Scrutinizes FTX U.S Over Deposit Insurance Claims

FDIC Scrutinizes FTX U.S Over Deposit Insurance Claims
  • The FDIC demanded taking down any content implying FDIC-insured.
  • The FDIC requested that they refrain from making any additional such representations.

Today, the FDIC revealed that five cryptocurrency firms had misled investors about the extent to which their deposits were insured. Among the entities mentioned were the cryptocurrency exchange FTX.US and its president, Brett Harrison, as well as the publications Cryptonews, CryptoSec, SmartAsset, and the website FDICCrypto.com.

The agency says Harrison lied on Twitter by saying that “direct deposits from employers to FTX.US were stored in individually FDIC-insured bank accounts in the users’ names” and that shares of the firm were held in “FDIC-insured and SPIC-insured brokerage accounts.” In addition, the government took issue with the company’s claim that it is FDIC-insured on its website.

No More Insurance Claims

In a statement, the FDIC asserted that certain of the FTX.US products referenced by Harrison and the FTX.US website were not insured, that deposits were not secured to the advertised amount, and that the FDIC’s name was being exploited.

The FDIC demanded that Harrison and FTX.US immediately take down any content implying that the company was FDIC-insured. In addition, the FDIC requested that they refrain from making any additional such representations and provide written confirmation and verification of compliance. If they don’t, the cryptocurrency exchange and Harrison might be subject to monetary fines under civil law.

After receiving the letter, Harrison answered that he and FTX.US “really didn’t mean to mislead anyone” and “per the FDIC’s instruction I deleted the tweet.” However, his Twitter page still displayed a number of posts that might be interpreted as suggesting FTX.US was indirectly insured by the FDIC.

The U.S. Securities and Exchange Commission (SEC) has initiated an inquiry against Coinbase for allegedly selling unregistered securities, and it is rumored that other large exchanges are also under investigation.

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