The U.S. banking agency orders the exchange to stop making “misleading representations” about FDIC insurance backing.
In a recent order, the U.S. banking regulator instructed OKCoin to remove misleading statements that falsely imply its customers’ accounts are protected by the U.S. Federal Deposit Insurance Corporation (FDIC). The regulator accused the company of making deceptive claims and demanded corrective action.
The FDIC has sent a letter to OKCoin USA Inc., the sister exchange of OKX based in San Francisco, demanding the immediate removal of any misleading claims from its website. Failure to comply may result in potential enforcement action for violating U.S. banking laws. This warning from the FDIC to crypto firms is part of a series of similar actions taken by the banking watchdog.
The FDIC, in its cease-and-desist demand, clarified that OKCoin is not insured by the FDIC, and the FDIC does not provide insurance for non-deposit products. The agency emphasized that OKCoin’s statements failed to differentiate between U.S. dollar deposits and crypto assets, creating the misleading implication that FDIC insurance coverage extends to all customer funds, including crypto assets.
Also Read: FDIC Chairman Blames Crypto for Recent US Bank Failures
The agency identified three instances of “false and misleading representations” by OKCoin. These included a statement on the website indicating that the HASH token from Provenance Blockchain had garnered regulatory acceptance from the SEC, OCC, FED, and FDIC. Additionally, the agency pointed out a 2020 website post where OKCoin advertised itself as “Licensed across the US with FDIC insurance on OKCoin accounts.” Furthermore, a Twitter post by a company official claiming FDIC insurance on USD deposits for customers in the US was also cited.
As of late Thursday, a request for comment sent to the CEO remained unanswered at the time of writing. Prior to this, the regulator had issued similar orders to Voyager Digital, which has since filed for bankruptcy, and FTX.US. The orders came after the former CEO, Brett Harrison, hinted in a tweet that the company was protected by the regulator. The FDIC had previously issued a broader caution to the cryptocurrency sector, clarifying that FDIC protections solely apply to banks and not to crypto firms that hold FDIC-insured bank accounts.
Also Read: Coinbase Faces Simultaneous State Security Regulator Action Amid SEC Lawsuit
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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