The Federal Deposit Insurance Corporation (FDIC) issued cease and desist letters to five cryptocurrency corporations on 19th August 2022. These corporations include FTX US owned by crypto billionaire Sam Bankman-Fried, FDICCrypto.com and news outlets Cryptonews.com, Cryptosec.info and SmartAsset.com.
The FDIC asked the above-mentioned companies to cease making false and misleading statements regarding their status with the FDIC. According to the FDIC, FTX US and and the other mentioned companies claimed that some of their cryptocurrency products were insured by the FDIC.
One of the companies even went as far as deceitfully registering a domain where it claims affiliation with or endorsement by the FDIC. This is an act that is heavily prohibited by the Federal Deposit Insurance Act (FDI Act). FDICCrypto.com redirects to a website that offers some services including a crypto service provider.
On 20th July, 2022, President of FTX US – Brett Harrison – apparently tweeted that deposits from FTX’s customers were stored in bank accounts that were insured by the FDIC. In addition to this, the FDIC stated that FTX presented itself as “FDIC-insured” on the SmartAsset.com and Cryptosec.info. This prompted the FDIC to serve FTX US with the cease and desist order.
The FDIC clarified that it does not insure any kind of brokerage accounts and does not cover any cryptocurrencies or stocks. This invalidates the information provided by FTX and the FDIC could take legal action against FTX US for misusing the regulators’ name.
To avoid this, FTX US has 15 working days from the publication of the release to submit a written letter to FDIC showing compliance with the requests made and detailing all the efforts made to remove all material linking them to the FDIC. Failure to comply with the request will result in further legal action. against the crypto exchange
FTX US President, Brenn Harrison acknowledged that he indeed wrote the tweet and has deleted it upon the FDIC’s request. Harrison added that FTS has acted in good faith and the company is ready to comply with the FDIC and all American regulators to ensure a smooth relationship between the company and the government.
Featured Image Source: www.news.coinxhigh.com
