This is about their direct deposit product, which is offered through an FDIC-insured bank, Evolve Bank & Trust. (Same bank that holds accounts for other fintech startups, such as Mercury.)

It works as follows: When you sign up to enable direct deposit, FTX opens an account for you at Evolve. You can use that account number to have some or all of your paycheck direct-deposited. When you buy cryptocurrencies on FTX, that account is automatically debited. (This avoids the ACH transfer step if you were to purchase using your "regular" bank account.)

I may be missing something, but I'm pretty sure the deposited funds are FDIC insured, up until you use them for a purchase. But FTX isn't allowed to say that without mentioning the name of the actual bank (Evolve), and the FDIC thinks the "until you use them for a purchase" part of the preceding sentence is confusing.

I agree with the FDIC here, but I don't think FTX's statements were particularly nefarious. There's more nuance here than could fit into the tweet this C&D is about.

Edit to add: this is how FTX explains it when you enable this feature on their site (no mention of FDIC insurance, but if it's a regular checking account, the unspent funds in that account would be protected if either FTX or Evolve went bust): https://pifke.org/ftxdd.png

They didn't - read the tweet, the statement they made is factual and boring. The tweet says they hold funds in FDIC insured banks and stocked in insured brokerages...how on earth is this misleading or controversial is beyond me.

This has popped up before with other crypto exchanges. The core piece is that the bank that the crypto exchange uses is FDIC insured but not the direct crypto exchange. So, if the bank that the exchange uses goes under, then yes that money should be insured. However, if the exchange itself goes under you SOL.

So technically this is accurate but very misleading. This is a complete nothing burger. They want Brett to remove a tweet (posted on his personal account by the way) and text on 3rd party sites FTX US does not control. Government regulation at its best.

You don't, but it's easier to ask for forgiveness, than for permission, when your wildcat bank loses all of its customers' money.

Strikes me as similar to small shops that have nothing to do with health care claiming to be "HIPAA-compliant".

Doing things like this certainly conveys useful information, although not the information they intended to convey.

Then we can all agree that the regulators are doing their jobs then.

Whether if it is the NTHSA investigating Tesla over its misleading claims and deceptive advertising of Fools Self Driving (FSD) and autopilot in the US to this matter of a crypto exchange misleading its customers via a tweet with the FDIC ordering them to remove the tweet, there are no exceptions to putting out vacuous and unchecked claims that involves safety in finance, or on the roads or anything that can cause financial or life changing implications.

This only shows that the regulators are doing their job and the system is working.