Sam Bankman-Fried, founder and chief executive officer of Cryptocurrency Derivatives Exchange FTX, said during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, U.S., on Wednesday, August 17, 2022.
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FTX, a cryptocurrency exchange controlled by Sam Bankman-Fried, received a shutdown warning Friday from the Federal Deposit Insurance Corporation, asking the company to stop “misleading” people consumers about the insurance status of their funds.
FDIC issue a letter to five crypto companies, including FTX US. Unlike deposits held at US banks, cryptocurrencies stored with brokers are not protected by the government.
“Based on evidence gathered by the FDIC, each of these companies misrepresented – including on their websites and social media accounts – claims or suggestions that certain related products to certain FDIC-insured cryptocurrencies or stocks held in an FDIC-insured brokerage account,” the regulator said in a press release.
In addition to FTX US, the FDIC has notified Cryptonews.com, Cryptosec.info, SmartAsset.com, and FDICCrypto.com. The FDIC said companies must “take immediate corrective action to address these false or misleading claims.” The agency says knowingly misrepresenting or implying that an uninsured product is FDIC-insured is prohibited under the Federal Deposit Insurance Act.
In a separate letter to the FTX, the FDIC said it appears that on July 20, Brett Harrisonpresident of FTX.US, published a tweet stating that direct deposits from employers are stored in FDIC-insured accounts in the user’s name.
Harrison tweeted on Friday that he deleted that post and did not mean to indicate that crypto assets stored in FTX are FDIC-insured, but that “USD deposits from employers are held.” at insured banks.”
“We really do not intend to mislead anyone, and we are not suggesting that FTX US itself, or crypto/non-fiat assets, benefit from FDIC insurance,” wrote Harrison.
FTX.US is a US cryptocurrency exchange owned by FTX, headquartered in the Bahamas and primarily focused on building its business outside of the US.
The FDIC also states that websites for SmartAsset and CryptoSec defines FTX as a crypto exchange “‘insured by the FDIC’.”