The FTX US crypto exchange has been hit with a cease and desist letter from the Federal Deposit Insurance Corporation (FDIC). Over what it says are misleading statements on the company’s website.

According to the letter, FTX US made “false and misleading statements” about FDIC insurance on its website.

  • The FDIC has sent cease and desist letters to five firms, including FTX US and its president Brett Harrison, over allegedly fraudulent social media postings.
  • The agency requires the crypto company to erase any false information and compliance affirmed in writing within two weeks.

The Federal Deposit Insurance Corporation (FDIC), a United States government agency that guarantees deposits in case of bank failure. Has taken issue with crypto exchange FTX US over statements it says are “false and misleading” about FDIC deposit insurance.

The Federal Deposit Insurance Corporation (FDIC) sent a similar notice to FTX US president Brett Harrison, who runs the US-based cryptocurrency platform.

The agency took issue with a series of tweets from Harrison on August 19. In which he claimed that FTX US “probably” had FDIC deposit insurance.

In one tweet, Harrison says: “ FTX US now supports ACH deposits Bank transfers take 1-2 days to arrive. And are insured by the FDIC up to $250,000 per account.”

The agency sent letters to four other crypto-related firms, according to details released in a press statement on Friday. The other websites that received warnings were Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com.

FTX US is not insured by FDIC

According to the FDIC, evidence suggests that several of the firms named in this report lied or made fraudulent claims. About insurance coverage by FDIC for certain crypto–related items or companies.

“In one instance, a firm pretending to offer a cryptocurrency also enrolled a domain name that fraudulently suggests an affiliation with or endorsement by the FDIC. These actions are illegal and misleading.” the agency warns,

The FDIC sent a letter to FTX US on Thursday about the issue. On July 20, FTX US boss Harrison earlier tweeted that “standing orders from companies to FTX US are kept in separately FDIC-insured bank accounts in the clients’ names.”

The agency also denied the claim that “stocks are kept in FDIC-insured and SIPC-covered brokerage accounts.”

The regulatory agency stated that FTX US is not FDIC-insured, despite what two websites might claim. The body says such false claims are likely to mislead and/or harm consumers.

In an acknowledgment of the FDIC warning, Harrison tweets:

According to the FDIC’s request, I removed the tweet. It was in response to questions asked on twitter as regards direct USD deposits from companies were kept at insured banks (i.e. Evolve Bank).

The FDIC demands that FTX US stop using false references to deposit insurance claims in its advertising.

The exchange also has to confirm within fifteen days of receiving the letter. And write to the agency to ensure that this does not happen again.  FTX US has not responded to a request for comment on whether it will comply with the FDIC’s orders.

This is not the first time FTX has been in hot water over its marketing practices. Last month, the Commodity Futures Trading Commission (CFTC) issued a warning letter to FTX over “false and misleading” statements. About the digital currency derivative products it offers for trading.

FTX is a digital currency derivatives exchange that allows users to trade a variety of cryptocurrency assets. The platform is owned by FTX Trading Ltd, which is registered in the Cayman Islands.

FTX US is a wholly-owned subsidiary of FTX Trading Ltd and is registered with the Securities and Exchange Commission (SEC) as a broker-dealer.

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James Atkins

I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.