FDIC tells CEX.IO to redact insurance promises FDIC tells CEX.IO to redact insurance promises

FDIC tells CEX.IO to redact insurance promises

CEX.IO has incorrectly stated that user deposits have $250,000 of coverage.

FDIC tells CEX.IO to redact insurance promises

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Cryptocurrency exchange CEX.IO has received a cease-and-desist order from the FDIC, as seen in a letter published by the U.S. regulator on Feb. 15.

The Federal Deposit Insurance Corporation’s legal division said that CEX.IO has made false or misleading statements suggesting that the FDIC insures it.

CEX.IO’s official website claims that “U.S. dollars held in your CEX.IO fiat currency wallet are FDIC-insured up to $250,000 per account” without qualification.

The FDIC, however, says that CEX.IO is itself not insured. It called the above statement misleading because it does not identify any insured deposit institutions (IDIs) with which CEX.IO has a direct or indirect relationship. Though CEX.IO may deposit funds with such an institution, its users’ holdings are not necessarily insured in that way. As such, the FDIC has demanded that CEX.IO remove all statements to that effect.

The regulator also directed two independent websites — Captain Altcoin and Bankless Times — to correct statements suggesting CEX.IO is FDIC-insured.

The FDIC also said that one of those claims incorrectly implies that crypto assets can be federally insured. This complaint does not seem to apply to CEX.IO’s own website, which has stated since at least 2021 that federal insurance does not apply to virtual assets.

CEX.IO is a relatively minor exchange, with a 24-hour volume of just $4.3 million.

The FDIC has sent similar notices to other crypto companies. Last year, it sent cease and desist letters to FTX.US and Voyager Digital over their insurance guarantees.

Posted In: , Exchanges, Regulation