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FTX makes misleading statements about FDIC products

According to the FDIC, FTX US and the other companies claimed that certain cryptocurrency products or services they offer are insured by the FDIC.

One of these companies even fraudulently registered a domain name “suggesting an affiliation with or endorsement by the FDIC,” an activity totally prohibited under the Federal Deposit Insurance Act (FDI Act). The website redirects to a website that offers a range of services, including a cryptocurrency service provider .
One of the “crypto services” that offers involves physical crypto bills.

According to FDIC, FTX US and its affiliates may have violated FDIC laws by “directly or by implication making false and misleading statements as to FTX US’s deposit insurance status.”

Apparently, on July 20, 2022, FTX US President Brett Harrison tweeted on his official account that direct deposits from the company’s employees are held in individual FDIC-insured bank accounts. His identical words, as quoted by the FDIC, were:

“Employer direct deposits to FTX US are held in FDIC-insured bank accounts individually named to the user,”… “Shares are held in FDIC-insured and SIPC-insured brokerage accounts.”

In addition, the FDIC stated that FTX.US showed itself as an “FDIC-insured” cryptocurrency exchange on the website and on CryptoSec.Info.

Brett Harrison: “Happy to work directly with FDIC.”

The FDIC has clarified that it does not insure any type of brokerage account and does not cover stocks or cryptocurrencies. Therefore, the information advertised by FTX US is completely false, allowing them to take legal action against the exchange for misusing the FDIC’s name.

FTX US, therefore, has 15 business days after the notice is posted to provide the FDIC with a written letter stating that it has complied with the requests and has made every effort to remove all materials associated it with the FDIC. If the exchange does not comply with the request, it may be confronted with further legal action.

Similarly, received a cease and desist letter from the FDIC for publicizing false reviews of cryptocurrency exchanges such as Coinbase, Gemini, and eToro, stating that they are regulated and insured by the FDIC.

FTX US President Brett Harrison today admitted that he actually wrote the tweet and clarified that he deleted it after being requested by the FDIC. Harrison later counted that FTX US acted in good faith and highlighted the exchange’s obligation to work hand-in-hand with US regulators.