FDIC Orders Crypto Exchange FTX US, 4 Others to Cease 'Misleading' Claims

The U.S. Federal Deposit Insurance Corp. (FDIC) published five cease-and-desist orders Friday, including one to crypto exchange FTX US, alleging they mislead investors by suggesting their accounts are insured through the government agency. From a report: The Cryptonews.com, Cryptosec.com, SmartAsset.com and FDICCrypto.com websites were also directed to cease these alleged misrepresentations. The FDIC said these "companies made false representations" that suggested their products might be insured by the agency. The FDIC covers federally regulated bank accounts, up to $250,000 per account. The FDIC previously ordered now-bankrupt Voyager Digital to cease making claims that implied its customers' funds might have been insured by the FDIC. It later issued a broader warning to the crypto industry at large, saying FDIC protections extend to banks but not to crypto companies that have bank accounts.

Friday's letters said several other websites were making specific inaccurate claims about which crypto companies had FDIC insurance. "The Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured product is FDIC-insured or from knowingly misrepresenting the extent and manner of deposit insurance. The FDI Act further prohibits companies from implying that their products are FDIC-insured by using 'FDIC' in the company's name, advertisements or other documents," the agency said. "The FDIC is authorized by the FDI Act to enforce this prohibition against any person."

Shocked!

[nickovs]

What? Misleading claims about Cryptocurrency? How can it be?

Warns after the damage has been done

[Ed Tice]

Proof that regulation in the US is toothless. Those claims should have been shut-down almost immediately the first time they were heard along with significant fines and penalties. Now there are no longer any assets left neither to pay depositors nor to pay any fines, so the warning is also meaningless. It's like they stole a TV, sold it, spent the money and are now being told not to steal more TVs.

Re: Warns after the damage has been done

[VTBlue]

When you have one party committed to ensuring a toothless regulator, and a 1/3 of the other party committed to the same, is this really surprising? This only ends when the public starts electing candidates who care about the common person and believes that government should protect and empower the little guys.

Re:

[rsilvergun]

I really think the key is to get voters to stop treating politics like reality TV. People want exciting rallies that are more like WWE events then political events. They want advertisements to hit them right in the feels. And they want to vote in local elections based on name recognition instead of policy.

What we need is to start teaching people critical thinking skills and to demand of those skills be taught in public schools and homeschools too. Critical thinking is a skill and it can be taught and it

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[poobah75]

I have a prediction, in a few years the number 1 movie will be called "Ass". That is all it will be for 90 minutes. It will go on to win 8 Oscars, and the best screenplay.

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[kiviQr]

Whole idea of decentralized coin was that there is no central authority - you get what you wish for.

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[Ed Tice]

Except, of course, that these companies were advertising FDIC insurance which is why the FDIC is involved.

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[tlhIngan]

Proof that regulation in the US is toothless. Those claims should have been shut-down almost immediately the first time they were heard along with significant fines and penalties. Now there are no longer any assets left neither to pay depositors nor to pay any fines, so the warning is also meaningless. It's like they stole a TV, sold it, spent the money and are now being told not to steal more TVs.

Consider the effects on the FDIC, and you'll see they probably didn't care.

The "investors" thought their deposi

Re:

[Ed Tice]

It depends on what you mean by affected. If you mean direct financial effect, that's for sure. In terms of the FDIC's mission, this completely undermines it. The purpose of the FDIC - from a policy standpoint - is to prevent things like bank runs based on rumors. Since deposits are insured, you don't have to constantly monitor a bank's health yourself and run for the exits at the slightest provocation. The FDIC does that and, if a bank does become insolvent, winds it down and depositors are unharmed.

Where'd everybody go?

[Train0987]

Where are all the crypto bros who swore I was wrong in the previous stories about them not being FDIC insured? Three total comments?

Have fun staying poor.

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[Anonymous Coward]

They are in bankruptcy and couldn't pay their internet bill. Peace and quiet at last.