Skip to main content

FTX’s money isn’t insured, FDIC says

FTX Cryptocurrency Derivatives Exchange CEO Sam Bankman-Fried Interview
FTX founder and CEO Sam Bankman-Fried.

The Federal Deposit Insurance Corporation (FDIC) slapped the Sam Bankman-Fried-owned cryptocurrency exchange FTX with a cease-and-desist order over “false and misleading statements” that suggest its assets are FDIC-insured. The FDIC doesn’t cover stocks or crypto, and only safeguards funds held in insured bank accounts.

In a letter to the exchange, the FDIC points to a now-deleted tweet from FTX president Brett Harrison, which states “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.” The referenced tweet also says that “stocks are held in FDIC-insured and SIPC [Security Investor Protection Corporation]-insured brokerage accounts.” The FDIC claims this falsely represents that FTX and the funds invested by users are FDIC-insured when they’re really not.

While not flagged in the FDIC’s letter, users have also pointed out another potentially misleading tweet from Harrison that says “cash associated with brokerage accounts is managed into FDIC-insured accounts” at FTX’s “partner bank.”

Harrison has since issued a response to the FDIC’s letter, explaining that FTX “really didn’t mean to mislead anyone,” and claims FTX “didn’t suggest that FTX US itself, or that crypto/non-fiat assets, benefit from FDIC insurance.” FTX CEO and founder Bankman-Fried provided further clarification as well, stating that while “FTX does not have FDIC insurance,” the banks it does business with do. Bankman-Fried adds that it may “explore potential ways that individual accounts using direct deposit... could, in the future, be used to further protect customers,” and that FTX “would be excited to work with the FDIC on that.”

As noted by the FDIC, the Federal Deposit Insurance Act (FDI Act) prohibits companies from ”implying that their products are FDIC–insured by using ‘FDIC’ in the company’s name, advertisements, or other documents.” The FDIC is giving FTX 15 days to provide confirmation that it has removed or corrected any alleged misrepresentations. In addition to FTX, the FDIC doled out cease-and-desist warnings to four other companies, including Cryptonews.com, Cryptosec.info, SmartAsset.com, and FDICCrypto.com.

The FDIC declined to comment beyond the contents of its letter, and FTX didn’t immediately respond to The Verge’s request for comment.

Like Robinhood, FTX has started offering both traditional stock and crypto trading options. In May, crypto billionaire Bankman-Fried disclosed a 7.6 percent stake in Robinhood, and he’s reportedly looking into purchasing the trading platform.

Even with the so-called crypto winter driving several crypto companies to bankruptcy, FTX and Bankman-Fried’s crypto trading firm Alameda Research have somehow managed to stay afloat. Bankman-Fried has extended lines of credit to numerous struggling crypto firms to help them weather the uncertain economy, and told Reuters he has “a few billion” more for future bailouts. According to documents obtained by CNBC, FTX brought in $1.02 billion in revenue in 2021 and $270 million in the first quarter of 2022.



Source: The Verge

Popular posts from this blog

Twitter has hidden the chronological feed on iOS again – and I'm furious

In a controversial move, Twitter has brought back a feature that removes the 'Latest Tweets' view for users on iOS, which is something that many users, including me, hated back in March 2022 – and it's now rolling out. The first time the company decided to do this, 'Home' would appear first in a tab at the top, and there was no way of changing it so that 'Latest Tweets' would be the default view. It was reverted back after the company said it was a 'bug' for iOS users. This time though, it's no bug. Instead, it's 'For You' and 'Following' where you can only swipe between them now, which doesn't make much sense for a platform where you're using the platform to keep up to date with who you follow. It's a bizarre change that makes me ask – who wants this, especially during a time when its new owner, Elon Musk, is bringing in and reversing changes almost every week still? This one change will have big consequenc

This new Linux malware floods machines with cryptominers and DDoS bots

Cybersecurity researchers have spotted a new Linux malware downloader that targets poorly defended Linux servers with cryptocurrency miners and DDoS IRC bots. Researchers from ASEC discovered the attack after the Shell Script Compiler (SHC) used to create the downloader was uploaded to VirusTotal. Apparently, Korean users were the ones uploading the SHC, and it’s Korean users who are targets, as well. Further analysis has shown that the threat actors are going after poorly defended Linux servers, brute-forcing their way into administrator accounts over SSH.  Mining Monero Once they make their way in, they’ll either install a cryptocurrency miner, or a DDoS IRC bot. The miner being deployed is XMRig, arguably the most popular cryptocurrency miner among hackers. It uses the computing power of a victim's endpoints to generate Monero, a privacy-oriented cryptocurrency whose transactions are seemingly impossible to track, and whose users are allegedly impossible to identify. Fo

New MacBook Pro Reviews: Hands-On Look at Performance and Upgraded Specs

The new 14-inch and 16-inch MacBook Pro models will start arriving to customers and launch in stores this Tuesday. Ahead of time, the first reviews of the laptops have been shared by select media publications and YouTube channels. Powered by Apple's latest M2 Pro and M2 Max chips, the new MacBook Pros offer up to 20% faster performance and up to 30% faster graphics. The laptops can be configured with up to 96GB of RAM, compared to a max of 64GB previously. Other improvements include Wi-Fi 6E, an upgraded HDMI 2.1 port with support for up to an 8K external display, and an extra hour of battery life over the previous generation. The new MacBook Pros have the same design as the previous models released in October 2021. The laptops can be pre-ordered on Apple's online store, with pricing starting at $1,999 for the 14-inch model and at $2,499 for the 16-inch model. Benchmarks Geekbench results from last week revealed that the M2 Pro and M2 Max chips offer up to around 20%

iPhone 15 Pro Rumored to Feature Ultra-Thin Curved Bezels

The iPhone 15 Pro models will have thinner, curved bezels compared to the iPhone 14 Pro models, potentially resulting in an Apple Watch-like appearance, according to the leaker known as " ShrimpApplePro ." ShrimpApplePro clarified that the next-generation "Pro" iPhone models will still have flat displays, since only the bezels are to be curved. According to a source speaking to the leaker, this combination of slimmer bezels and curved edges could result in a look similar to the Apple Watch Series 7 and Series 8. The curved front glass will purportedly also be present on the ‌iPhone 15‌ and ‌iPhone 15‌ Plus's design, but these devices will not have thinner bezels compared to their iPhone 14 predecessors. ShrimpApplePro added that the ‌iPhone 15‌ lineup will feature the same display sizes as last year's ‌iPhone 14‌ lineup. Last year, the leaker was among the first to say that the ‌iPhone 15‌ Pro models will have a titanium frame with curved rear ed