Home Business Crypto Exchange FTX Ordered to End False and Misleading Claims by US Banking Regulator

Crypto Exchange FTX Ordered to End False and Misleading Claims by US Banking Regulator

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Crypto Exchange FTX Ordered to End False and Misleading Claims by US Banking Regulator

The Federal Deposit Insurance Corporation said a July tweet from Brett Harrison, head of FTX’s US operations, contained misleading claims

A US banking regulator on Friday ordered crypto exchange FTX to halt what it called “false and misleading” claims the exchange had made about whether the firm’s funds were secured by the government.

The Federal Deposit Insurance Corporation said a July tweet from Brett Harrison, head of FTX’s U.S. operations, contained misleading claims that funds held and stocks purchased through FTX were insured by the FDIC, and ordered the company to remove any misleading language from its social media accounts and websites.

In the tweet, which Harrison has since deleted, he said 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 cease and desist letter to FTX US that these statements imply that FDIC insurance is available for cryptocurrency and stock holdings, and that the agency does not insure cryptocurrency accounts. brokerage.

In a tweet on Friday, FTX CEO Sam Bankman-Fried pointed out that FTX is not FDIC insured and apologized if anyone had misinterpreted previous comments.

The order, one of five sent to crypto firms by the FDIC on Friday, comes as regulators have stepped up efforts to vet crypto firms that may mislead investors about whether their funds are benefiting from government support. The problem has been on the rise lately, as turmoil in the crypto market has led to strains and the collapse of some prominent companies.

The banking regulator has issued a similar cease-and-desist letter to bankrupt crypto firm Voyager Digital, arguing that the company misled customers by claiming their funds with Voyager would be covered by the FDIC. Later, the FDIC issued an advisory urging banks dealing with crypto companies to ensure customers are aware of the types of government-insured assets, especially in cases where the companies offer a combination of crypto products. uninsured alongside insured bank deposit products.

(Reuters)


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