FDIC orders Sam Bankman-Fried's FTX and other crypto sites to stop telling customers their funds are insured

FDIC orders Sam Bankman-Fried's FTX and other crypto sites to stop telling customers their funds are insured
FTX CEO Sam Bankman-FriedTom Williams/CQ-Roll Call, Inc via Getty Images
  • The FDIC issued five cease-and-desist letters over crypto firms' claims customer funds are insured.
  • Regulators called out crypto firms for making "false and misleading" statements to customers.

The Federal Deposit Insurance Corporation handed out cease-and-desist letters to five crypto sites on Friday, demanding they stop telling customers their funds were insured by the regulator.

Sam Bankman-Fried's FTX was among recipients of the FDIC's order. An executive from the company tweeted last month that employer accounts and its stocks were FDIC-insured, although it didn't specify if customer accounts were. The FDIC disputed that in a letter to FTX, demanding the tweet and any similar statements be taken down for potentially misleading customers.

"Clear communication is really important; sorry!" Sam Bankman-Fried tweeted in response, shortly after the executive announced the original tweet was taken down. "FTX does not have FDIC insurance (and we've never said so on website etc.); banks we work with do. We never meant otherwise, and apologize if anyone misinterpreted it," he added.

FTX was listed as FDIC-insured on the websites Smartasset.com, Cryptonews.com, and Cryptosec.com, which were also handed cease-and-desist letters to. Cryptonews.com wrongly claimed at least four crypto exchanges to be FDIC-insured, including eToro, Gemini, and Coinbase, the FDIC said.

Another company registered under FDICCrypto.com was ordered to change its website URL, with the FDIC stating that the "so-called cryptocurrency" offered by the company was not insured by the FDIC.


"Based upon evidence collected by the FDIC, each of these companies made false representations 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," regulators said in a statement on Friday, blasting the offenses as "false and misleading."

Regulators have been paying closer attention to the statements made by crypto companies, especially as it relates to the safety of customers' investments. The FDIC this summer issued a similar order to Voyager over claims of FDIC insurance of users' funds.

The Securities and Exchange Commission recently doubled staffing in its crypto crime unit, and agency head Gary Gensler has been vocal about what he perceives as risks to individual investors, describing the current regulatory environment for crypto as "the wild west."