• The US Federal Deposit Insurance Corp (FDIC) issued a cease and desist letter to OKCoin over misleading statements about its insurance status.
• The FDIC called out OKCoin for suggesting that certain crypto-related products were FDIC-insured, as well as implying that all customer funds (including crypto assets) had FDIC coverage.
• In addition, the agency has published general guidelines for crypto companies regarding their representations of insurance status.
FDIC Cracks Down on Misleading Insurance Claims by OKCoin
The US Federal Deposit Insurance Corp. (FDIC) has issued a cease and desist letter to crypto exchange OKCoin over false representations of its insurance status. The agency has ordered OKCoin to remove the misleading claims from its website, social media accounts, marketing materials, mobile app, and other customer-facing publications within 15 business days.
False Representations Regarding Insurance Status
The FDIC accused OKCoin and its senior executives of making false representations that certain crypto-related products were FDIC-insured. Specifically, the agency called out three instances where the exchange spun tales about its insurance status: a blog post advertisement suggesting that it held licenses spanning the US and carried FDIC insurance for its accounts; suggesting that Provenance Blockchain’s HASH utility token had received regulatory approval from the SEC, OCC, FED, and the FDIC; and Chief Marketing Officer tweeting that the exchange provided FDIC insurance on USD deposits.
Deposit Insurance Intended to Cover Customers’ Deposits
The FDIC’s deposit insurance is primarily intended to cover customers’ deposits in the event of a failure of an FDIC-insured bank up to $250,000. However, this security blanket does not stretch to digital asset deposits – meaning these statements made by OKCoin are false.
Actions in Line with Prior Statements
This is not the first time the FDIC has taken action against crypto-related companies for falsely associating themselves with the institution – similar letters have been sent out last year to five exchanges including FTX and Voyager Digital. In light of these recent developments, they have also published general guidelines for crypto companies regarding their representations of insurance status moving forward.
Conclusion
It is clear that regulators are cracking down on those attempting to mislead investors about their services or product offerings – particularly when it comes to security measures such as insured deposits or regulatory approvals from government entities like the SEC or OCC etc.. Investors should do their due diligence before investing in any service or product offering so they can be sure they are investing safely and securely!