FDIC Orders Crypto Companies to Stop Claiming that the FDIC Insures Crypto Products
Commentary by Steven Lofchie
The FDIC issued cease-and-desist orders to five crypto-related companies to demand that the companies stop making statements claiming that the FDIC insures various crypto exchanges or products.
In separate letters to the five companies, the FDIC said it had reason to believe each company was stating or implying that various crypto-related products or platforms were backed by FDIC insurance. The FDIC stated that (i) companies' claims of FDIC insurance are in violation of the Federal Deposit Insurance Act, (ii) it does not insure any cryptocurrency exchanges or any losses affiliated with cryptocurrency and (iii) it does not directly regulate cryptocurrency exchanges.
The FDIC demanded that the companies (i) remove any representations that reflect or suggest that crypto-related products are FDIC-insured, and (ii) cease and desist from promulgating additional statements falsely claiming that crypto-related products are FDIC-insured. The FDIC also requested that the companies provide written notice of compliance with the cease-and-desist orders within 15 days of receipt, and said that failure to comply with the orders may result in further legal action.
Commentary
The recipients of the letters are a somewhat eccentric collection of businesses. A number of the recipients were actually providing false information about other sites with which the recipients have no obvious connection. For example, CryptoSec lists 10 crypto exchanges that it claims are FDIC-insured. FDICCrypto redirects to CH's Service Provider, which seems to be a combination of a limousine service, crypto business and music site. An interesting business mix.