FDIC Issued a Cease-and-Desist Letters to These Crypto Companies
The Federal Deposit Insurance Corporation (FDIC) today sent cease-and-desist letters to five cryptocurrency companies, one of which was FTX US, the U.S.-based branch of CEO Sam Bankman-cryptocurrency Fried’s exchange FTX. The other three companies were:
Cryptonews.com, Cryptosec.info, SmartAsset.com, and the FDIC cover the cryptocurrency industry.
On Friday, cease and desist letters were delivered to Crypto.com as well. According to the agency, these letters were made in response to the company’s “false statements” that their products were FDIC-insured.
In every instance, the businesses have a period of fifteen days during which they are required to remove any “false and misleading statements” from their websites and social media accounts and provide written proof to the FDIC.
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The Federal Deposit Insurance Corporation (FDIC) brought to the attention of FTX US in a letter that it sent on July 20 a tweet by CEO Brett Harrison that has since been deleted. The tweet stated that “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.”
Per the FDIC’s instruction I deleted the tweet. The tweet was written in response to questions raised on twitter regarding whether direct USD deposits from employers were held at insured banks (i.e. Evolve Bank).
— Brett Harrison (@Brett_FTX) August 19, 2022
Fresh reactions of FTX
Harrison tweeted today in reaction to the letter, “We really didn’t mean to mislead anyone, and we didn’t indicate that FTX US itself, or that crypto/non-fiat assets, benefit from FDIC protection.” “We genuinely didn’t mean to mislead anyone,” Harrison said. Harrison continued by saying that he thinks this “provides clarity” on the purpose of the corporation.
According to the agency, the cryptocurrency news website Cryptonews.com published ratings of cryptocurrency exchanges, stating that Coinbase, eToro US, Crypto.com, and Gemini were insured by the FDIC. The financial regulator drew attention to pages on CryptoSec.com and SmartAsset.com that include lists of “FDIC-insured cryptocurrency exchanges.” These pages can be found on the respective websites.
The agency claims that the owner of FDICCrypto.com registered the domain for the website at the end of July and has been sending traffic to another website that also sells cryptocurrency products. The FDIC has issued a notice to the owner of the domain name, demanding that they immediately stop using it.
It has only been a few days since Senator Pat Toomey (R-PA) made public a letter he had written to a banking agency in which he stated that his office had received multiple accounts from whistleblowers stating that “personnel in the FDIC’s Washington, D.C. headquarters are urging FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto-related companies.” Toomey’s letter stated that his office had received multiple accounts from
On Wednesday, the Federal Deposit Insurance Corporation (FDIC) stated that its measures were in line with its responsibilities to ensure that banks interact with cryptocurrency in a secure manner.
An agency spokesperson said in an email that this may involve the FDIC requesting that an institution delay initiating or refrain from expanding crypto-related activities until supervisory feedback is taken into account. “This may involve the FDIC requesting that an institution delay initiating or refrain from expanding crypto-related activities,” the spokesperson said. “Given the hazards that are plainly visible in the crypto-asset markets, it is necessary and proper to take the actions that have been outlined here.”