The Federal Deposit Insurance coverage Company (FDIC) slammed crypto alternate OKCoin with a requirement to halt deceptive claims about being insured.
Below the Federal Deposit Insurance coverage Act, it’s towards the regulation to misrepresent uninsured deposits as insured or present false details about the protection.
In a letter to OKCoin CEO Hong Fang on Thursday, the FDIC identified three situations the place the alternate was accused of creating false claims. The company has the authority to subject cease-and-desist orders and impose civil penalties for violations.
A weblog from 2020 reveals San Francisco-based OKCoin saying that it’s “licensed throughout the US with FDIC insurance coverage on OKCoin accounts” as one of many prime 10 causes to decide on its platform.
On the web site, additionally they claimed that the Provenance blockchain’s HASH token on OKCoin had gained regulatory acceptance from entities together with the FDIC.
Additional, the FDIC additionally cited a Twitter put up the place OKCoin’s chief advertising and marketing officer and its affiliated alternate OKX claimed that “in case you are within the US, we provide FDIC insurance coverage on USD deposits.”
“Actually, OKCoin shouldn’t be FDIC-insured and the FDIC doesn’t insure non-deposit merchandise,” the letter mentioned.
“By not distinguishing between US-dollar deposits and crypto property, the statements indicate FDIC insurance coverage protection applies to all buyer funds (together with crypto property).” The company additionally talked about that it doesn’t endorse or assist any particular blockchains.
An OKCoin spokesperson informed Blockworks that the platform is conscious of this matter and is taking motion to evaluate the FDIC’s statements.
“A core precept at Okcoin is to respect relevant legal guidelines and laws, and we stay dedicated to collaborating with stakeholders together with regulators every time attainable,” they added.
FDIC safety excludes crypto custodians and exchanges
A number of different corporations, together with Voyager and FTX US, have additionally earlier acquired stop and desist letters from the FDIC.
The FDIC has clarified prior to now that its protections kick in when an insured financial institution fails, however they don’t cowl crypto custodians, exchanges, or pockets suppliers.
Crypto platforms aren’t the one ones with out FDIC insurance coverage. Apps like Venmo, Money App, and PayPal are additionally deemed dangerous for storing money.
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