The United States Federal Deposit Insurance Corporation issued a cease and desist order to FTX US on Friday, instructing the cryptocurrency exchange to stop making “false” representations and “misleading” customers regarding the insurance coverage of their goods.
The FDIC has issued similar warnings to four other cryptocurrency firms. There are many such websites, including SmartAsset.com, Cryptonews.com, Cryptosec.info, and FDICCrypto.com. The FDIC does not insure all commodities connected to cryptocurrencies, but the agency believes that these businesses mislead their customers.
The FDIC sent a letter to FTX US stating that the exchange’s president, Brett Harrison, “stepped the line” on July 20 with the following tweet:
“Stocks are kept in FDIC- and SIPC-insured brokerage accounts, while direct employer payments to FTX US are maintained in bank accounts in the users’ names.”
The FTX.US cryptocurrency exchange is owned by crypto millionaire Sam Bankman-Fried. The Bahamas serve as the exchange’s headquarters, and they’ve been putting much of their energy into growing their business outside of the United States.
It has been made plain that neither stocks nor cryptocurrencies are included in the FDIC’s scope of coverage for insurance, protection, or brokerage accounts.
Cases Against FTX in Court?
It is clear that the information being spread by FTX US is false, and the bitcoin exchange may face legal consequences for using the FDIC’s name in vain.
Many people have been vocal about the need for insurance for businesses that are not banks, such as those dealing in cryptocurrencies.
In July, the Federal Deposit Insurance Corporation (FDIC) published guidance advising American financial institutions to assess and mitigate risks related to entering into outsourcing arrangements with cryptocurrency service providers.
The agency underlined that unlike insured banks, where deposits up to $250,000 are safe from default, cryptocurrencies are not protected in the same way.