OKCoin faces accusations of making false claims on three separate instances that is FDIC-insured.The Federal Deposit Insurance Corporation (FDIC) slammed crypto exchange OKCoin with a demand to halt misleading claims about being insured.
Recently, the FDIC addressed a cease-and-desist to the CEO of OKCoin, Hong Fang, intimating the latter of a potential violation of the Federal Deposit Insurance Act. According to the government agency, the company has falsely claimed a level of customer protection that it does not provide. Under the Federal Deposit Insurance Act, it is against the law to misrepresent uninsured deposits as insured or provide false information about the coverage.
The agency cited three examples of “false and misleading representations,” including a mention on its website that the Provenance Blockchain’s HASH token on OKCoin had “received broad regulatory acceptance from the SEC, OCC, FED, and the FDIC” and a 2020 posting to the company’s website, where it advertised itself as “Licensed across the US with FDIC insurance on OKCoin accounts.” It also cited a company official’s Twitter post that “if you are in the US we offer FDIC insurance on USD deposits.”
The regulator previously sent similar orders to now-bankrupt Voyager Digital and to FTX.US, after then-CEO Brett Harrison suggested in a tweet that the company was covered by the regulator. The FDIC had also issued a broader warning to the crypto sector, saying FDIC protections focus only on banks, not crypto firms that have FDIC-insured bank accounts.
The agency pointed out that users and potential customers should be properly intimated about all the risks associated with cryptocurrencies. The FDIC also claimed that the crypto firm needs to further explicitly clarify the lack of regulatory protections on crypto held on its exchange.
In order to properly inform the customers of this information, the government agency has asked the company to review its marketing materials, website content, and other public statements. OKCoin To Revise Communication. The outcome of this situation will have implications not only for OKCoin but also for the broader cryptocurrency industry, emphasizing the need for responsible practices and regulatory compliance.