Regulators have weak record against FTX on deposit insurance
FTX erred in messaging when it suggested depositors were insured, but feds regulators will struggle to prove that the exchange did so with sinister motives.
Opinion
In a cease-and-desist letter to growing crypto exchange FTX, the Federal Deposit Insurance Corporation (FDIC) shed light on a now-deleted tweet from the exchange's chairman, Brett Harrison, and issued a stern warning about company messaging.
Harrison's original tweet read, "Employer direct deposits to FTX US are stored in individually FDIC-insured bank accounts on behalf of users." He added, "The shares are held in FDIC and SIPC [Security Investor Protection Corporation] insured brokerage accounts."
Although Harrison led FTX to its best year ever in 2021, increasing revenue by 1,000%, the company now faces the unenviable prospect of going up against a powerful government agency.
In an attempt to clarify the situation to his 761,000 Twitter followers, Brett said, “Clear communication is really important; Sorry! FTX does not have FDIC insurance (and we never said so on the website, etc.); the banks we work with do. We never meant otherwise, and we apologize if anyone misinterpreted it."
But it appears that the statements made on Twitter by Harrison in response to the FDIC's cease and desist letter regarding "misrepresentations" were factually correct: user funds are held in banks insured by the FDIC.
Related: FDIC-FTX Conflict is Another Reason Investors Are Pulling Funds From Exchanges
His original communications were interpreted as if the funds were themselves insured, which they are not. In any case, companies are not allowed to mention a relationship with the FDIC unless there is a direct link and the correct language is used to clearly describe it.
This is a mail error from FTX. A mistake was certainly made, prompting...
FTX erred in messaging when it suggested depositors were insured, but feds regulators will struggle to prove that the exchange did so with sinister motives.
Opinion
In a cease-and-desist letter to growing crypto exchange FTX, the Federal Deposit Insurance Corporation (FDIC) shed light on a now-deleted tweet from the exchange's chairman, Brett Harrison, and issued a stern warning about company messaging.
Harrison's original tweet read, "Employer direct deposits to FTX US are stored in individually FDIC-insured bank accounts on behalf of users." He added, "The shares are held in FDIC and SIPC [Security Investor Protection Corporation] insured brokerage accounts."
Although Harrison led FTX to its best year ever in 2021, increasing revenue by 1,000%, the company now faces the unenviable prospect of going up against a powerful government agency.
In an attempt to clarify the situation to his 761,000 Twitter followers, Brett said, “Clear communication is really important; Sorry! FTX does not have FDIC insurance (and we never said so on the website, etc.); the banks we work with do. We never meant otherwise, and we apologize if anyone misinterpreted it."
But it appears that the statements made on Twitter by Harrison in response to the FDIC's cease and desist letter regarding "misrepresentations" were factually correct: user funds are held in banks insured by the FDIC.
Related: FDIC-FTX Conflict is Another Reason Investors Are Pulling Funds From Exchanges
His original communications were interpreted as if the funds were themselves insured, which they are not. In any case, companies are not allowed to mention a relationship with the FDIC unless there is a direct link and the correct language is used to clearly describe it.
This is a mail error from FTX. A mistake was certainly made, prompting...
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