🏦 Crypto Cease and Desist
On July 20th, Brett Harrison, the president of crypto exchange FTX US, published a tweet claiming that direct deposits from employers to the exchange are stored in FDIC-insured accounts. The problem, of course, is that it's untrue. FTX is in no way FDIC insured. In response, the Federal Deposit Insurance Corporation sent a cease and desist letter to five crypto firms (including FTX US) instructing them to immediately stop making misleading and/or false claims about the insurance status of their accounts, writes CNBC.
In a press release following the letters, the governmental agency said that “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.”
Harrison quickly deleted his tweet after the letter, then posted that he only meant to clarify that US currency was held in FDIC-insured banks — something that no one had questioned. He added, “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.”
FTX's founder and CEO, Sam Bankman-Fried, has become a default patriarch of crypto in recent years and has even been extending lines of credit to other crypto platforms during this year's crypto market rout. “We're starting to get a few more companies reaching out to us,” Bankman-Fried told Reuters, adding that he has a “few billion” on hand to help struggling firms.
Much like an attorney can say something in court before the judge orders it stricken from the record, crypto platforms are doing their best to appear legitimate and safe as their industry takes a huge dip. More than anything, though, it's become incredibly clear that crypto is well-past-due for federal regulations.