FTC Issues Warning about Crypto Deposits
The U.S. Federal Trade Commission (FTC) has issued a Consumer Alert cautioning consumers that cryptocurrency deposits are not insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC provides insurance for bank deposits up to $250,000 per depositor. However, this protection does not extend to crypto assets.
Lack of FDIC Insurance for Crypto Assets
The FTC’s Consumer Education Specialist Cristina Miranda explained that if your bank is FDIC insured, your deposits are protected up to $250,000 in case of bank failure. However, funds deposited with a crypto-based financial services provider do not have the same level of protection. If the crypto company goes under, your money is not FDIC insured or protected.
Voyager Digital’s Misleading Claims
Miranda highlighted the case of Voyager Digital LLC, a crypto-based financial services provider that falsely claimed that money deposited through their app was FDIC insured. Despite these claims, Voyager was never an FDIC insured bank. When Voyager failed and filed for bankruptcy, account holders were locked out and lost their money.
Permanently Banned from Offering Services
As a result of their misleading claims, Voyager and its affiliated companies have been permanently banned from offering any products or services related to depositing, exchanging, investing, or withdrawing assets. The FTC emphasizes that consumers should be aware that crypto deposits are not FDIC insured. In the event of any issues, the government may not be obligated to assist in recovering lost funds.
Hot Take: FTC Warns Consumers About Lack of FDIC Insurance for Crypto Deposits
The U.S. Federal Trade Commission (FTC) has issued a warning to consumers regarding the lack of FDIC insurance for cryptocurrency deposits. While traditional bank deposits are protected up to $250,000 in case of bank failure, the same level of protection does not apply to crypto assets. The FTC highlighted the case of Voyager Digital LLC, which falsely claimed that their app allowed FDIC-insured deposits. However, when Voyager failed and filed for bankruptcy, customers lost their money. The FTC has permanently banned Voyager and its affiliates from offering any services related to cryptocurrency deposits. It is important for consumers to understand that crypto deposits are not FDIC insured, and the government may not intervene to help recover lost funds.
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