The US Federal Deposit Insurance coverage Corp. (FDIC) issued a stop and desist letter to crypto trade OKCoin over deceptive statements relating to the trade’s insurance coverage standing.
In a letter dated June 15, the FDIC accused OKCoin and its senior executives of constructing false representations that sure crypto-related merchandise have been FDIC-insured.
The company has ordered OKCoin to take away these deceptive claims from its web site, social media accounts, advertising supplies, cellular app, and different customer-facing publications inside 15 enterprise days. Furthermore, OKCoin should present written affirmation assuring the FDIC of their immediate compliance.
The FDIC’s deposit insurance coverage is primarily meant to cowl prospects’ deposits within the occasion of a failure of an FDIC-insured financial institution, providing a protecting embrace of up to $250,000. Nevertheless, this comforting safety blanket doesn’t stretch to digital asset deposits.
The FDIC referred to as out OKCoin on three cases the place the trade spun tales about its insurance coverage standing. These cases included a weblog submit commercial suggesting that the trade held licenses spanning the US and carried the coveted FDIC insurance coverage for its accounts.
Moreover, OKCoin recommended that the Provenance Blockchain and its HASH utility token, out there on the platform, had acquired regulatory approval from the SEC, OCC, FED, and the FDIC.
Lastly, OKCoin’s Chief Advertising and marketing Officer tweeted that the trade offered FDIC insurance coverage on USD deposits.
The assertion from the regulator reads,
“OKCoin is just not FDIC-insured and the FDIC doesn’t insure non-deposit merchandise. By not distinguishing between US-dollar deposits and crypto property, the statements suggest FDIC insurance coverage protection applies to all buyer funds (together with crypto property). As well as, the FDIC doesn’t insure or endorse specific blockchains.”
Regulator aligns actions with prior statements
This isn’t the primary time the FDIC has taken motion in opposition to crypto-related firms for falsely associating themselves with the establishment. Final 12 months, related stop and desist letters have been dealt to 5 exchanges, together with FTX.US and Voyager Digital.
In gentle of those current developments, the FDIC has additionally revealed general guidelines for crypto firms to comply with when referencing the company.
The rules make clear that FDIC insurance coverage solely protects prospects within the occasion of a default, insolvency, or chapter of a financial institution the place the trade holds an insured account. Moreover, it explicitly states that neobanks usually are not lined by FDIC insurance coverage.
