The US Federal Trade Commission (FTC) has warned that deposits in cryptocurrencies are not insured by the US Federal Deposit Insurance Corporation (FDIC), and holders will not be able to expect a return of lost funds.

FTC Client Specialist Cristina Miranda explained that if users invest in cryptocurrency platforms, their funds are not insured or protected by the FDIC. In the event of a hacker attack on cryptocurrency sites or theft of funds, affected users will not be able to turn to the authorities for help.

“If your bank is FDIC insured, you are protected against up to $250,000 in losses if the bank fails. Funds you deposit into a cryptocurrency service provider’s account are not insured by the FDIC, and you will not be protected if that provider goes bankrupt,” the official said.

The FTC employee mentioned cryptocurrency lender Voyager Digital, which is currently going through bankruptcy proceedings. The crypto lender misled people by claiming that money deposited through the Voyager App was FDIC insured, the FTC alleges.

“Despite its claims, Voyager has never received FDIC insurance. So when Voyager ultimately failed and filed for bankruptcy, investors’ accounts were frozen and many lost money,” added Cristina Miranda.

In 2020, the FTC compensated 8,000 people who lost money in two cryptocurrency scams, Bitcoin Funding Team and My7network. The commission reimbursed the victims about $470,000.