The United States Federal Deposit Insurance Corporation (FDIC) has warned OKCoin over “misleading” promises made on its website that seem to indicate FDIC account protection.
The cryptocurrency exchange OKCoin was issued a severe warning from the Federal Deposit Insurance Corporation regarding its “false and misleading statements” on its website and in its promotional materials.
The FDIC stated in a letter dated June 15 that the exchange and its senior officials had misrepresented or indicated that certain products related to cryptocurrencies were FDIC-insured.
The San Francisco-based exchange was consequently ordered by the FDIC to remove false claims made on its website that implied the accounts of its customers were guaranteed by the FDIC.
If OKCoin doesn’t respond to the FDIC’s requests right away, it could be in violation of U.S. banking laws. Additionally, the FDIC’s call to action marks the beginning of a period of greater regulatory scrutiny of cryptocurrency operations, with the possibility of enforcement action if such errors are not promptly fixed.
Today, we issued letters to three companies, demanding they cease and desist from making false and misleading statements in English and Spanish regarding FDIC deposit insurance status. We ask that they take immediate corrective action.https://t.co/4fsINu8Fd1 pic.twitter.com/K5YtH8KXXu
— FDIC (@FDICgov) June 15, 2023
The FDIC noted that a false impression has been generated by OKCoin’s failure to explicitly distinguish between U.S. dollar deposits and cryptocurrency assets on its site. The regulator asserts that OKCoin’s comments give the impression that the FDIC insurance, which is intended to protect deposits made in traditional banks, also covers different types of customer funds, such as cryptocurrencies.
The FDIC made it clear that OKCoin is not insured by it and that it does not provide protection for non-deposit products. This distinction, which the FDIC claims OKCoin failed to fully disclose, is frequently disregarded and gives the appearance that crypto assets are covered by the FDIC’s insurance.
The FDIC adopted a rule in May 2022 outlining its authority to prohibit people and organizations from misrepresenting deposit insurance or improperly utilizing its name or logo.
In response to the FDIC’s accusations, OKCoin has promised to evaluate the identified statements right away and take the appropriate corrective measures. Adherence to applicable laws and regulations is an essential principle at OkCoin, and we are dedicated to working with regulators and other stakeholders wherever possible.
“OkCoin is aware of this issue and is acting immediately to evaluate the statements flagged by the FDIC and address them as necessary,” reads a statement from the company.