FDIC calls out FTX US, other crypto firms over insurance claims

WASHINGTON — The Federal Deposit Insurance Corp. issued five cease-and-desist letters on Friday telling five cryptocurrency-related companies to stop making false and misleading statements about the availability of deposit insurance for their customers.

The FDIC announced Friday afternoon that it had directed five companies behind certain crypto websites — including FTX US, Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com — to “take immediate corrective action to address false or misleading statements” concerning whether their customers’ funds were insured by the federal agency.

Under the Federal Deposit Insurance Act, the FDIC has the authority to prohibit use of the agency’s name or logo to imply customer funds are government insured when they are not. Each of the letters — which were signed by FDIC assistant general counsel Seth Rosebrock — noted that the FDIC had the authority to assess civil money penalties as well.

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The Federal Deposit Insurance Corp. sent letters to FTX US and other cryptocurrency firms for purportedly implying that crypto assets were FDIC insured, the latest in a series of efforts by the agency to clear up what it says are misleading claims by crypto firms with bank partnerships.

Bloomberg News

“Based upon evidence collected by the FDIC, each of these companies made false representations — including on their websites and social media accounts — stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured ,” the agency said in a press release. “In one case, a company offering a so-called cryptocurrency also registered a domain name that suggests affiliation with or endorsement by the FDIC.”

The orders follow a similar one issued against Voyager, a cryptocurrency company that went bankrupt in July, after customers scrambled to understand what would happen to their dollars held by a partner bank after the crypto

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