FDIC orders OKCoin to correct misleading insurance claims News ▸ US ▸ Regulation
FDIC orders OKCoin to correct misleading insurance claims
The FDIC cited three instances of OKCoin making false statements about its insurance status.
2 min read
Updated: Jun. 16, 2023 at 4:25 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The U.S. Federal Deposit Insurance Corp. (FDIC) has issued a cease and desist letter to OKCoin, warning the exchange about misleading statements regarding its insurance status.
In a June 15 letter, the FDIC alleged that the exchange and its senior executives made false representations stating or suggesting 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 any other customer-facing publication 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 of the failure of an FDIC-insured bank. The federal agency insures customers’ deposits of up to $250,000 in registered banks, providing a safety net in case of bank failures. However, it does not cover digital assets deposits.
FDIC cites instances of misrepresentation
The agency cited three instances of misleading statements made by OKCoin concerning its insurance status. These included a blog post advertisement where the exchange claimed it was licensed across the U.S. and its accounts had FDIC insurance.
Another instance cited by the regulator involved the exchange’s statement that the Provenance Blockchain, and its HASH utility token, which is available from OKCoin, have received regulatory approval from SEC, OCC, FED, and the FDIC.
In the third instance, OKCoin’s Chief Marketing Officer tweeted that OKCoin offers FDIC insurance on USD deposits.
According to the FDIC, these statements contain false and misleading representations regarding FDIC deposit insurance and could mislead customers.
“OKCoin is not FDIC-insured and the FDIC does not insure non-deposit products. By not distinguishing between U.S.-dollar deposits and crypto assets, the statements imply FDIC insurance coverage applies to all customer funds (including crypto assets). In addition, the FDIC does not insure or endorse particular blockchains.”
An OKCoin spokesperson told CryptoSlate that:
“A core principle at Okcoin is to respect applicable laws and regulations, and we remain committed to collaborating with stakeholders including regulators whenever possible. Okcoin is aware of this matter and is taking immediate action to assess the statements flagged by the FDIC and address them as necessary.”
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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Posted In: US, Regulation
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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