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FTX has complied with an FDIC cease-and-desist order
FTX claimed that depositors’ funds were covered with FDIC insurance when in fact they aren’t
Voyager Digital made the same claim in 2020, but this only applies to regulated banks
FTX has complied with a cease-and-desist letter sent to it by the Federal Deposit Insurance Corporation (FDIC) over statements it made relating to deposit insurance. FDIC criticised a tweet from CEO Brett Harrison last month which claimed that some user deposits were guaranteed through FDIC insurance, which FDIC denied was the case and may have led to users believing they are covered when in fact they’re not.
Harrison Claimed FTX Deposits Were Insured
Harrison’s now-deleted tweet suggested that “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.” FDIC clarified in a letter to FTX that this, and other statements made online by FTX and its subsidiaries, contained “false and misleading representations that uninsured products are insured by the FDIC, as well as false and misleading statements about the extent and manner of protection provided by FDIC deposit insurance and misuse the FDIC’s name.”
It added that the statements implied that FTX US is FDIC-insured and that funds sent to it are covered by FDIC insurance, which is confirmed was not the case. FTX was ordered to change the wording on its websites to reflect this, while Harrison was told to delete his tweet, both within 15 days, which they have done.
Voyager Digital Made Same Mistake
Harrison apologised for this statement on Twitter, saying that he had never intended to deceive anybody:
Per the FDIC’s instruction I deleted the tweet. The tweet was written in response to questions raised on twitter regarding whether direct USD deposits from employers were held at insured banks (i.e. Evolve Bank).
— Brett Harrison (@Brett_FTX) August 19, 2022
The now defunct exchange Voyager Capital also seems to have fallen foul of FDIC laws when it claimed in 2020 that “Voyager is FDIC insured up to $250K”, when in fact it was only users of Voyagers’ partner bank, Metropolitan Commercial Bank, that were covered.
Very few crypto exchanges are covered by anny kind of insurance, due to the risks posed by the sector, with Gemini the first to achieve this back in 2018.
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