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On Friday, August 19, the Federal Deposit Corporation (FDIC) gave crypto-related cease and desist orders to five firms. These five companies are Cryptosec.info, Smartasset.com, FDICCrypto.com, Cryptonews.com, and FTX US. The agency is in-charge of issuing and regulating the deposits of financial institutions including FDIC-insured community banks.
According to the letter, the five companies and their officers are asked to “cease and desist from making false and misleading statements about FDIC deposit insurance.” They are also instructed to address these misleading or false statements immediately.
Moreover, the FDIC noted that each of these companies have made false representations on their social media handles and websites among other platforms. They have reportedly stated that some crypto–related products or the stocks stored in brokerage accounts are FDIC–insured.
The FDIC has further disclosed that Cryptonews.com has reviews on its website. It has made the claims that Coinbase, Etoro, and Gemini crypto trading platforms are FDIC insured. Smartasset.com and Cryptosec.info have also shared the list of FDIC-insured crypto exchanges that include Robinhood, Crypto.com, Luno, and Voyager. On the other hand, FDICCrypto.com also registered a website with FDIC in its domain name.
FTX US Among Companies Ordered to Cease and Desist
As mentioned above, the FTX US is among the crypto firms that were issued a cease and desist letter from the FDIC. FTX owner Sam Bankman-Fried tweeted an apology for the confusion regarding FDIC insurance. His tweet read as: “Clear communication is really important; sorry!”
Bankman-Fried said the banks he works with has FDIC insurance, however his company doesn’t have one. In another tweet, he apologized again saying, we never meant otherwise. He also made it clear that FTX US isn’t FDIC insured.
It is also interesting to note that FDIC has taken action against crypto companies for the first time. Last month, the regulator and the Federal Reserve Board in a letter issued to Voyager Digital asked the crypto lender to cease and desist to make false or misleading representations of deposit insurance status.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
