FDIC demands corrections from OKCoin for false statements about deposit insurance.
The US Federal Deposit Insurance Corporation (FDIC) has sent a letter to OKCoin USA, Inc. asking the cryptocurrency exchange to take action against false and misleading statements about its deposit insurance. The FDIC sent three letters on Thursday to OKCoin USA, Inc., Bodega Importadora de Pallets, and Money Avenue LLC, demanding that they address these issues and warning that certain statements could harm consumers.
FDIC Chairman Martin J. Gruenberg said in a statement, “The FDIC has observed an increasing number of instances online where firms or individuals have misused the FDIC’s name or logo, or have made false or misleading representations about deposit insurance. These practices can confuse consumers about whether they are dealing with an insured institution and if they are protected by deposit insurance.”
Misleading statements
The FDIC has accused OkCoin and its senior executives of making multiple misleading statements. For example, OkCoin claimed in a post that it was “licensed across the US with FDIC insurance on OKCoin accounts,” according to the FDIC. The agency also said the exchange’s chief marketing officer tweeted that an affiliated exchange offered FDIC insurance.
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The FDIC has ordered the exchange to remove all statements that imply that OKCoin is FDIC-insured, that the FDIC has ever endorsed any particular blockchain, and other remedies. The exchange has 15 business days to send the FDIC written confirmation that it has complied with the requests.
The FDIC only insures deposits held at insured banks and savings associations, not at crypto companies, and can insure up to at least $250,000. The agency also noted in a July 2022 fact sheet that deposit insurance does not apply to financial products such as stocks, bonds, commodities, or crypto assets.
“In addition to potential consumer harm, customer confusion can lead to legal risks for banks if a crypto company, or other third-party partner of an insured bank with whom they are dealing, makes misrepresentations about the nature and scope of deposit insurance,” the FDIC said in a related advisory last year.
