The US Federal
Deposit Insurance Corp. (FDIC) has ordered OKCoin to remove misleading
statements that suggest that its customers’ accounts were insured through the
government agency. FDIC issued the order on Thursday in a letter addressed to
the exchange’s CEO, Hong Fang.
FDIC has directed
that OKCoin, the San Francisco-based exchange affiliated with OKX, immediately remove any offending claims from its website. Failure to which, the banking regulator
warned, the company could face further enforcement actions.
“OKCoin is
not FDIC-insured, and the FDIC does not insure non-deposit products,” the
agency said in the cease-and-desist order. “By not distinguishing between
US-dollar deposits and crypto assets, the statements imply FDIC insurance
coverage applies to all customer funds (including crypto assets).”
FDIC pointed out
in the letter three instances where OKCoin misrepresented its insurance status.
One is through an advert where the exchange said it was licensed across the US
with FDIC insurance on OKCoin accounts.
Furthermore,
according to the watchdog, the exchange stated that the Provenance Blockchain’s
HASH token based on OKCoin had ‘received broad regulatory acceptance from the
SEC, OCC, FED, and the FDIC’. The exchange informed its US customers
that it offered FDIC insurance on USD deposits, FDIC said.
OKCoin has been
given 15 days by the banking regulator to respond with a written confirmation
that it has complied with the issued directives. The regulator maintains that
it focuses solely on insuring banks, and the same does not apply to cryptocurrency firms with bank
accounts.
FDIC’s Guidelines
It is not the
first time the banking regulator has accused crypto companies of allegedly
making false representations that their accounts were insured with the agency.
In 2022, FDIC issued five cease-and-desist orders against several crypto firms,
including the now-bankrupt FTX.
“The Federal
Deposit Insurance Act (FDI Act) prohibits any person from representing that an
uninsured deposit is insured or from knowingly misrepresenting the extent and
manner in which a deposit or certificate is insured under the FDI Act, whereby
making affirmative statements of by omitting material information,” FDIC
said.
Besides, FDIC ordered the collapse…
