A US banking regulator Friday ordered crypto exchange FTX to stop what it called “false and misleading” claims the exchange had made about whether funds with the company are insured by the government.
The Federal Deposit Insurance Corporation said a July tweet by Brett Harrison, FTX’s head of US operations, contained misleading claims that funds held with and shares purchased through FTX were FDIC-insured, and ordered the company to deceptive language from its social media accounts and websites.
In the tweet, which Harrison has since deleted, he stated that employers’ direct deposits to the crypto exchange “are stored in individually FDIC-insured bank accounts” and that stocks purchased through FTX US are “held in FDIC-insured” brokerage accounts. .
The FDIC said in its termination letter to FTX US that those statements implied that FDIC insurance was available for cryptocurrency and stock ownership, and that the agency does not insure brokerage accounts.
In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasized that FTX is not FDIC-insured, and apologized if anyone misinterpreted previous comments.
The injunction, one of five sent to crypto firms by the FDIC on Friday, comes as regulators have stepped up efforts to monitor crypto firms that may mislead investors about whether their funds enjoy a government backstop.
The issue has come to a head lately as the crypto market turmoil has led to stress and the collapse of a number of leading companies.
The banking regulator issued a similar termination letter to bankrupt crypto firm Voyager Digital, arguing that the company had misled customers by claiming their money at Voyager would be backed by the FDIC.
Later, the FDIC issued an advisory requesting banks dealing with crypto companies to ensure that customers know what types of assets are government-insured, particularly in cases where companies offer a mix of uninsured crypto products alongside insured bank deposit products.
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