FTX US among 5 companies to receive cease and desist letters from FDIC

The Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to five companies for allegedly making false representations about deposit insurance related to cryptocurrencies.

FDIC issued a Friday press release disclosing cease and desist letters for cryptocurrency exchange FTX US and websites SmartAssets, FDICCrypto, Cryptonews and Cryptosec. The government agency alleges that these organizations misled the public about certain cryptocurrency-related products being insured by FDIC.

“These representations are false or misleading,” the FDIC said in regards to “certain crypto-related products” being FDIC-insured or that “stocks held in brokerage accounts are FDIC-insured.” The regulator said these companies must “take immediate corrective action to address these false or misleading statements” on their websites and social media accounts.

The FDIC has been vocal about the lack of insurance protection for non-bank entities, which includes crypto-focused firms. In July, the regulator issued a notice advising banks in the U.S. that they need to assess and manage risks when forming third-party relationships with crypto service providers. The FDIC reiterated that, while deposits at insured banks were protected against default for up to $250,000, no such coverage exists for crypto firms.

This story is still in development.