The Federal Deposit Insurance Corporation (FDIC), one of the two federal agencies insuring savings in American depository institutions, has sent cease-and-desist letters to five companies, including FTX.US, for making false statements about deposit insurance.

See related article: FDIC clarifies that cryptocurrencies are not insured

Fast facts

  • In a press release, the FDIC said it has demanded in its letters that the five companies, their offices, directors, and employees, stop making misleading claims about FDIC deposit insurance and take immediate corrective action.
  • “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 press release said.
  • FDIC said that in one case, a cryptocurrency company registered a domain name that suggests affiliation with or endorsement by the FDIC.  
  • The Federal Deposit Insurance Act (FDI Act) prohibits companies from using “FDIC” in a company’s name, advertisements, or other documents, implying that their products are FDIC-insured, the press release said. 
  • FDIC has sent a letter to FTX.US, one of the five companies, alleging that FTX.US had identified itself as a FDIC-insured cryptocurrency exchange on the SmartAsset website. 
  • FTX chief executive officer Sam Bankman-Fried (SBF) responded on Twitter that FTX does not have FDIC insurance. But “banks we work with do. We never meant otherwise, and apologize if anyone misinterpreted it,” SBF said. 

See related article: U.S. federal deposit insurer allegedly deterring banks from doing business with crypto firms