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Crypto Exchange FTX Ordered to Stop 'False and Misleading' Claims by U.S. Banking Regulator

Pete Schroeder and Hannah Lang

WASHINGTON (Reuters) – U.S. banking regulators on Friday ordered cryptocurrency exchange FTX to stop what it said were “false and misleading” claims about the company’s Whether the funds are insured by the government.

The FDIC said a July tweet by Brett Harrison, head of FTX’s U.S. operations, contained misleading claims that funds held and purchased were The shares are FDIC-insured through FTX, and the company was ordered to remove any misleading language from its social media accounts and website.

In Harrison’s deleted tweet, he stated that employers “store in a separate FDIC-insured bank account” direct to cryptocurrency exchanges and that shares purchased through FTX US are “stored in FDIC-insured” brokerage account. In its cease and desist letter to FTX US, the FDIC said the statements imply that FDIC insurance applies to cryptocurrency and stock holdings and that the agency does not provide insurance for brokerage accounts.

On Friday, FTX CEO Sam Bankman-Fried emphasized that FTX is not FDIC insured, and we apologize if anyone has misinterpreted previous comments.

Order, one in five FDIC scrutiny of crypto firms on Friday comes as regulators step up their efforts to oversee crypto firms, These companies can mislead investors about whether their money is government-backed. The issue has only recently surfaced due to the turmoil in the cryptocurrency market that has led to the pressure and closure of some high-profile companies.

Banking regulator issues similar cease-and-desist letter in bankruptcy Crypto firm Voyager Digital argues that it misled customers by claiming that their Voyager funds would be covered by the FDIC. Later, the FDIC issued an advisory urging banks dealing with crypto companies to ensure customers understand what types of assets are insured by the government, especially if the company offers both uninsured crypto products and insured bank deposit products.



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