The Federal Deposit Insurance Corporation, which protects depositors against the failure of member banks, on Friday issued cease-and-desist order to five companies including digital-asset exchange FTX U.S., for allegedly making false representations that certain products or stocks are FDIC-insured. The entities that received warnings also include Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com, according to an FDIC statement issued Friday.
“Based upon evidence collected by the FDIC, each of these companies made false representations—including on their websites and social-media accounts—stating or suggesting that certain crypto—related products are FDIC—insured or that stocks held in brokerage accounts are FDIC—insured,” the statement read. According to FDIC’s letter to FTX.US, Brett Harrison, president of the crypto exchange, tweeted in late July that direct deposits from employers to FTX U.S. are stored in individually at FDIC-insured bank accounts in the users’ names. Harrison’s tweet also mentioned that “stocks are held in FDIC-insured and SIPC-insured brokerage accounts,” FDIC said. The tweet has been deleted following the FDIC’s order. Harrison on Friday tweeted that his social-media missive on Twitter wasn’t intended to mislead the public.
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