A US financial institution regulator ordered crypto trade FTX on Friday to halt what it referred to as “false and deceptive” claims the trade had made about whether or not funds on the firm are insured by the federal government.
The Federal Deposit Insurance coverage Company stated a July tweet by Brett Harrison, head of FTX’s U.S. operations, contained deceptive claims that funds held at and shares bought by FTX had been FDIC insured, and ordered the corporate to take away any deceptive language from its social media accounts and web sites.
Within the tweet, which Harrison has since deleted, he acknowledged that direct deposits from employers to the crypto trade are “saved in individually FDIC-insured financial institution accounts” and that shares bought by way of FTX US “are held in FDIC-insured” brokerage accounts.
The FDIC stated in its stop and desist letter to FTX US that these statements implied that FDIC insurance coverage was out there for cryptocurrency and inventory holdings, and that the company doesn’t insure brokerage accounts.
In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasised FTX just isn’t FDIC-insured, and apologized if anybody misinterpreted earlier feedback.
The order, certainly one of 5 despatched to crypto corporations by the FDIC on Friday, comes as regulators have ramped up efforts to police crypto corporations that could be deceptive traders on whether or not their funds get pleasure from a authorities backstop.
The problem has come to a head of late, as turmoil within the crypto market has led to emphasize and the collapse of some excessive profile corporations.
The financial institution regulator issued the same stop and desist letter to bankrupt crypto agency Voyager Digital , arguing that the corporate had misled clients by claiming their funds with Voyager can be coated by the FDIC.
Later, the FDIC issued an advisory urging banks coping with crypto firms to make sure that clients are conscious of what kinds of belongings are government-insured, notably in instances the place corporations supply a mixture of uninsured crypto merchandise alongside insured financial institution deposit merchandise.
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