FDIC sends 5 companies, including FTX.US, cease and desist letters for making false statements about deposit insurance

The Federal Deposit Insurance coverage Corp. (FDIC) stated Aug. 19 that it issued letters demanding Cryptonews.com, Cryptoytosec.info, SmartAsset.com, FTX.US and FDICCrypto.com to cease making deceptive statements about FDIC deposit insurance coverage and implement corrective measures. 

FDIC deposit insurance coverage protects clients within the unlikely occasion of the failure of an FDIC-insured financial institution.  

Within the stop and desist letters despatched Aug. 18, the FDIC demanded that the businesses, their officers and staff abstain from alluding to any presence of FDIC deposit insurance coverage at sure exchanges or their very own platforms. It additionally demanded that the businesses take instant measures to appropriate any false and deceptive statements made beforehand. 

The FDIC alleges within the textual content of the letters that every entity has purportedly misrepresented the depository insurance coverage standing of holdings or furthered falsehoods regarding deposit insurance coverage protection. 

Primarily based on the proof offered by the FDIC within the letter, every of the businesses allegedly made false representations — together with on their web sites and social media accounts — stating or suggesting that sure crypto-related merchandise are FDIC-insured or that shares held in brokerage accounts are FDIC-insured. 

In keeping with the FDIC’s letter to FTX.US, President Brett Harrison tweeted on July 20 that “direct deposits from employers to FTX US are saved in individually FDIC-insured financial institution accounts within the customers’ names,” and “shares are held in FDIC-insured and SIPC-insured brokerage accounts.”

The regulator claims these statements include false and deceptive representations of the corporate’s uninsured merchandise. It added:

“The truth is, FTX US shouldn’t be FDIC-insured, the FDIC doesn’t insure any brokerage accounts, and FDIC insurance coverage doesn’t cowl shares or cryptocurrency. “

The regulator, in its letter to Cryptonews.com, listed 5 situations, out of many cited, the place the web site had allegedly both misrepresented or mischaracterized the FDIC-insured claims of their evaluations of crypto exchanges.

The FDIC singled out Cryptosec.data for allegedly together with a listing of “FDIC-insured Crypto Exchanges” on its web site together with the usage of the FDIC’s official seal. SmartAsset.com additionally contributed to a listing of supposed FDIC-insured crypto exchanges that the FDIC has requested be eliminated.

The regulator alleges that FDICCrypto.com used the company’s identify in its registered area identify. This, in line with the FDIC, suggests affiliation with or endorsement by the FDIC, and it has demanded the corporate stop the usage of the area identify or related domains instantly.

The FDIC demanded that each one firms take away the offending examples from their respective areas and referred to as for every entity to conduct a scrubbing of any further deceptive statements and report again in 15 days with compliance.

Posted In: Authorized, Regulation

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