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FTX CEO Clarifies Misinterpreted Claims of FTX.US Being FDIC Insured

2 mins
Updated by Ryan Boltman
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In Brief

  • Sam Bankman-Fried says FTX claims of being FDIC-insured is a case of miscommunication.
  • FTX US was ordered to remove statements that claimed it was insured by the FDIC
  • The federal agency is clamping down on crypto companies who claim that their services are insured by the agency.
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FTX founder Sam Bankman-Fried has denied that the exchange has FDIC insurance while apologizing for any information that might have been misinterpreted to mean FTX.US is FDIC-insured.

In an August 19 tweet, he explained that the banks working with FTX have FDIC insurance and also mentioned that the exchange is looking for ways to use individual accounts to protect customers and hopes to work with the FDIC on that.

The tweets come after the FDIC sent a cease and desist letter to FTX, asking it to stop misleading customers by telling them it is insured.

FDIC Writes 5 Crypto Firms About Misleading Statements

The letter was sent to five crypto-focused businesses. FDIC alleged that gathered evidence showed that these companies were making false representations on their websites and social media about their crypto products or stock in brokerage accounts being FDIC insured.

The letter to FTX also referenced the tweet by FTX.US President Brett Harrison, who said that FTX stores direct deposits in FDIC-insured accounts under the user’s name.

Harrison has since deleted the tweet per FDIC instructions and said it was a response to a question as to whether “direct USD deposits from employers were held at insured banks.”

He also corrected himself, saying, “We really didn’t mean to mislead anyone, and we didn’t suggest that FTX US itself, or that crypto/non-fiat assets, benefit from FDIC insurance. I hope this provides clarity on our intentions.”

References About FTX US Being FDIC-insured Remains

However, it appears that Harrison did not delete all the tweets where he referenced that FTX brokerage accounts are FDIC insured.

Additionally, some websites such as CryptoSec, Cryptonews, and SmartAsset also refer to FTX as an FDIC-insured exchange. It is unknown if they have removed this reference.

FDIC has been doubling down on its efforts to stop crypto-focused companies from misleading their customers in recent weeks. This is likely due to the incident with the bankrupt crypto lender, Voyager Digital.

Voyager claimed it was FDIC insured, which likely influenced several of its customers to use its services.

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.
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