OKCoin Crashes Into FDIC's Wall Of Justice Over Titanic Insurance Scandal

The Federal Deposit Insurance Corporation (FDIC) has accused cryptocurrency exchange OKCoin of making false and misleading claims regarding its insured status.

This week, the FDIC sent a cease-and-desist letter to OKCoin, demanding the immediate correction of the claims.

Allegations of Misleading Statements

According to the FDIC’s letter, OKCoin and its senior executives violated section 18(a)(4) of the Federal Deposit Insurance Act by making statements suggesting that OKCoin is FDIC-insured and that funds deposited with OKCoin are insured by the FDIC.

This includes claims about FDIC insurance being applicable to non-deposit products, implying that the FDIC endorsed a particular blockchain, and not distinguishing between US-dollar deposits and crypto assets.

The FDIC said such statements are likely to mislead consumers, who may be under the impression that all their funds, including crypto assets, are insured by the FDIC.

Corrective Measures Demanded

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The FDIC demanded OKCoin take several corrective measures, including the immediate removal of all statements that imply FDIC insurance on its website, social media platforms and any other consumer-facing materials, and cease making such representations in the future.

OKCoin must provide written confirmation to the FDIC within 15 business days of receipt of the letter, detailing all efforts that were taken to comply with the FDIC’s demands.

Potential Consequences

If OKCoin fails to respond to the FDIC's letter, the agency has warned that it could take appropriate action as authorized by the Federal Deposit Insurance Act and any other applicable law or regulation. This could include the issuance of cease-and-desist orders and the assessment of civil money penalties.

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