In response to the letter, Brett Harrison, CEO of FTX US, tweeted today: “We really didn’t mean to mislead anybody.” The Federal Deposit Insurance Corporation issued cease-and–desist letters to five crypto companies today, including FTX US (the U.S-based arm of CEO Sam Bankman–Fried’s cryptocurrency exchange FTX).
On Friday, Cryptosec.info and SmartAsset.com received cease-and-desist letters. The agency claims that they were responding to their “false representations” that their products are FDIC insured.
All cases have the same deadline: the companies must remove “false or misleading statements” from all websites and social media accounts within 15 days and then send written confirmation to FDIC.
FDIC’s letter to FTX US highlighted a tweet by CEO Brett Harrison dated July 20, which stated “Direct deposits from employers to FTX US” and that each user has access to FDIC-insured accounts.
Harrison replied to the letter today with the following tweet: “We really didn’t mean to mislead anybody.” Harrison also said that he didn’t suggest that FTX US or crypto/nonfiat assets would benefit from FDIC insurance. Harrison stated that he hopes that this will “provide clarity” about the company’s intentions.
According to the agency, Cryptonews.com published reviews on cryptocurrency exchanges stating that eToro US and Crypto.com were insured by FDIC. The banking regulator called out pages on SmartAsset.com and CryptoSec.com that list “FDIC-insured” cryptocurrency exchanges.
FDICCrypto.com alleges that the owner of the domain registered it at the end July and that he has been redirecting traffic from the site to which he sells crypto products. FDIC demands that the owner stop using the domain name immediately.
These letters follow Sen. Pat Toomey’s letter, which he sent to banks. It stated that his office had received numerous accounts from whistleblowers stating that FDIC headquarters in Washington, D.C., requested that FDIC regional offices send letters to multiple banks asking them to stop expanding their relationships with crypto-related businesses.
The FDIC informed Decrypt Wednesday that their actions were consistent in fulfilling its responsibility to ensure banks use crypto safely.
A spokesperson for the FDIC stated in an email that “this could involve the FDIC asking an institution to delay initiating or cease expanding crypto-related activity until supervisory feedback has been taken into consideration.” These are appropriate and necessary actions, given the risk inherent in crypto-asset markets.