FTX Exchange receives cease and desist order in the US

FTX United States
  • The Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order against FTX’s US subsidiary.
  • The FDIC alleges that FTX falsely claims that its financial products are endorsed by the regulator.
  • The FDIC urged FTX to amend such statements and not make them again.

Recently, the regulated cryptocurrency exchange FTX received a cease and desist order in the US, specifically from the Federal Deposit Insurance Corporation (FDIC). The agency alleges that the exchange house founded by Sam Bankman-Fried allegedly made false statements. 

According to a document issued by the regulatory body, dated Thursday, August 18, FTX’s subsidiary in the US, FTX US, allegedly made statements asserting that the financial products they offer are supported by the FDIC.

According to the FDIC Potential Violation Statement, FTX US President Brett Harrison allegedly made false claims that the FDIC insures its customers’ funds. In July of this year, and through the social network Twitter, Harrison indicated that “direct deposits from employers to FTX.US are stored in individual bank accounts insured by the FDIC in the name of the users”, reported the financial entity.

At that time, Harrison also reportedly pointed out that “the shares are held in FDIC and SIPC-insured brokerage accounts,” which the FDIC insists are misleading statements, according to the recent legal filing.

The FDIC’s cease and desist order is addressed to FTX US, Chairman Harrison and Director of Regulation Dan Friedberg. In the FDIC document you can read the following:

“These statements appear to contain false and misleading representations that uninsured products are insured by the FDIC, as well as false and misleading statements about the scope of protection provided by FDIC deposit insurance and misuse of the name of the FDIC. FDIC.”

US Federal Deposit Insurance Corporation (FDIC).

The FDIC urged the cryptocurrency exchange to amend such claims it claims are false and to take other corrective action, such as not repeating such claims and demonstrating compliance with these requirements within 15 days.