The US Federal Deposit Insurance Corp. (FDIC) has issued a cease and desist letter to OKCoin, warning the exchange about misleading statements regarding its insurance status.
On June 15 letterthe FDIC alleged that the exchange and its senior executives made false statements claiming or implying that certain crypto-related products were FDIC-insured.
The agency ordered the exchange to remove these claims from its website, social media accounts, marketing materials, mobile app and other customer-facing publications within 15 business days and provide written confirmation of compliance.
FDIC deposit insurance protects customers by providing coverage for their deposits in the unlikely event that an FDIC-insured bank goes bankrupt. The federal agency insures customer deposits of up to $250,000 with registered banks, providing a safety net in the event of bank failures. However, it does not cover digital asset deposits.
FDIC cites instances of misrepresentation
The agency cited three instances of OKCoin making misleading statements about its insurance status. These included a blog post advertisement in which the exchange claimed that it was licensed in the US and that the accounts had FDIC insurance.
Another example cited by the regulator involved the exchange’s statement that the Provenance Blockchain and HASH utility token, which is available from OKCoin, has received regulatory approval from SEC, OCC, FED and the FDIC.
Thirdly, OKCoin’s Chief Marketing Officer tweeted that OKCoin provides FDIC insurance for USD deposits.
According to the FDIC, these statements contain false and misleading statements regarding FDIC deposit insurance and may mislead customers.
“OKCoin is not FDIC insured and the FDIC does not insure non-deposit products. By not distinguishing between US dollar deposits and crypto-assets, the statements imply that FDIC insurance coverage applies to all client funds (including crypto-assets). In addition, the FDIC does not underwrite or endorse any particular blockchains.”
That said a spokesperson for OKCoin CryptoSlate That:
“A core principle at Okcoin is to respect applicable laws and regulations, and we remain committed to working with stakeholders, including regulators, where possible. Okcoin is aware of this matter and is taking immediate action to review and if necessary address the statements flagged by the FDIC.”
In 2022, the FDIC issued similar notices to FTX.US and Voyager Digital.
Updated with OKCoin’s statement on June 16 at 16:25 UTC.
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