A US bank regulator ordered crypto exchange FTX on Friday to halt what it called "false and misleading" claims the exchange had made about whether funds at the company are insured by the government.
The Federal Deposit Insurance Corporation said a July tweet
by Brett Harrison, head of FTX's US operations, contained misleading claims
that funds held at and stocks purchased through FTX were FDIC insured, 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 stated
that direct deposits from employers to the crypto exchange are “stored in
individually FDIC-insured bank accounts” and that stocks purchased via FTX US
“are held in FDIC-insured” brokerage accounts.
The FDIC said in its cease and desist letter to FTX US that
those statements implied that FDIC insurance was available for cryptocurrency
and stock holdings, and that the agency does not insure brokerage accounts.
In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasised
FTX is not FDIC-insured, and apologised if anyone misinterpreted previous
comments.
The order, one of five sent to crypto firms by the FDIC on
Friday, comes as regulators have ramped up efforts to police crypto firms that
may be misleading investors on whether their funds enjoy a government backstop.
The issue has come to a head of late, as turmoil in the crypto market has led
to stress and the collapse of some high profile firms.
The bank regulator issued a similar cease and desist letter
to bankrupt crypto firm Voyager Digital, arguing that the company had 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 that customers are aware of what types of assets are
government-insured, particularly in cases where firms offer a mix of uninsured
crypto products alongside insured bank deposit products. © Reuters 2022