FDIC Issues 5 Crypto-Related Companies Cease-And-Desist Orders
A cease and desist letter has been issued to five companies by the Federal Deposit Insurance Corporation (FDIC), which includes the FTX crypto exchange.
Sam Bankman-Fried, the chief executive of the FTX exchange, clarified that they do not have FDIC insurance and apologized for any misinterpretation. He reiterated that the company does not have FDIC insurance.
On Friday, the Federal Deposit Insurance Corporation (FDIC) issued five companies cease and desist orders.
The deposits of community banks, along with other financial institutions, which are insured by the FDIC are regulated and insured by the agency.
According to the letters that were sent, the FDIC told the five companies as well as their officers to stop making misleading and false statements regarding FDIC deposit insurance.
In addition, the agency said that the companies in question should also take immediate action to correct and address the misleading or false statements that had already been made.
FDICCrypto.com, Smartasset.com, Cryptosec.info, Cryptonews.com, and FTX US were the five companies that were sent these cease and desist orders.
According to the FDIC, every single one of the five companies had made these false representations on their social media accounts as well as their websites.
The agency said that the representations suggested or stated that some crypto-related products were insured by the FDIC, or FDIC insurance was available for some of the stocks included in brokerage accounts.
The FDIC said that some of the reviews on the Cryptonews.com website claimed that different crypto trading platforms like Gemini, Etoro, and Coinbase were insured by the FDIC.
In addition, Smartasset.com and Cryptosec.info also provide a list of crypto exchanges that they claim to be FDIC-insured. These include Robinhood, Voyager, Luno and Crypto.com.
As far as FDICCrypto.com is concerned, the agency said that this company had blatantly used FDIC’s name as part of its own domain name for misleading customers.
As mentioned earlier, one of the companies that received a cease and desist order include the FDIC. Even though the FTX US and FTX are two different trading platforms, they have the same founder.
Not only did Sam Bankman-Fried launch the two platforms, but is also the CEO of both. US residents are not permitted to use the global exchange FTX for trading.
Bankman-Fried issued an apology on Twitter about the confusion. He said that clear communication was of the utmost importance and FTX did not have any FDIC insurance.
He also added that they had never claimed the same on their website and had not meant to imply it. He apologized for the misrepresentation and reiterated that the exchange is not FDIC insured.
This is certainly not the first time that the FDIC has gone after crypto companies. The Federal Reserve Board and the regulator had also issued a letter in the previous month to Voyager Digital.
It had demanded that the lender stop making misleading and false statements about its deposit insurance status. Last month, Voyager filed for bankruptcy.