FDIC issues cease and desist letter to FTX US [pdf]
The last go-round of this was with Celsius Network, which went bust a few months ago.
Celsius managed to create the impression that, funds deposited to them were somehow insured.[1] Now that Celsius is in bankruptcy, customers are finding out that they&#x27;re not. Plus there were sketchy transactions, such as loans to affiliated parties. Which, of course, went bad.<p>The trouble with FTX is that they are a pretend bank and brokerage. They offer services that look like banking and brokerage, but the backup isn&#x27;t there. They&#x27;re not regulated as a bank or a broker, and they don&#x27;t have the insurance of a bank or a broker.<p>From their site:<p>* &quot;FTX US is a US licensed cryptocurrency exchange that welcomes American users.&quot;<p>* &quot;The safe and easy way to get into crypto.&quot;<p>* &quot;We are US based and regulated&quot;<p>* &quot;Don&#x27;t be like Larry&quot;.<p>There is a concerted effort to create an illusion of legitimacy.<p>Even in their disclosures[2], you can see them trying to create the illusion that they&#x27;re regulated as a financial institution.   Their derivatives unit, FTX US Derivatives, does have some of the licenses of a commodity exchange. The main company, &quot;West Realm Shire Services&quot; (remember Magic, the Gathering Online Exchange?) just has money transmitter licenses. Not in NY or CA, interestingly. They don&#x27;t have a banking license from a state. Or a New York State BitLicense. Or a brokerage license from the SEC.[3] Or an exchange license from the SEC. Or Security Investors Protection Corporation insurance. Or Financial Industry Regulatory Authority regulation.<p>[1] <a href="https:&#x2F;&#x2F;newsoutlet.ai&#x2F;blockchain&#x2F;celsius-ceo-alex-mashinsky-announces-self-insurance-all-its-users-coins&#x2F;" rel="nofollow">https:&#x2F;&#x2F;newsoutlet.ai&#x2F;blockchain&#x2F;celsius-ceo-alex-mashinsky-...</a><p>[2] <a href="https:&#x2F;&#x2F;ftx.us&#x2F;legal&#x2F;regulations-licenses" rel="nofollow">https:&#x2F;&#x2F;ftx.us&#x2F;legal&#x2F;regulations-licenses</a><p>[3] <a href="https:&#x2F;&#x2F;www.sec.gov&#x2F;reportspubs&#x2F;investor-publications&#x2F;divisionsmarketregbdguidehtm.html" rel="nofollow">https:&#x2F;&#x2F;www.sec.gov&#x2F;reportspubs&#x2F;investor-publications&#x2F;divisi...</a>