HASH

Provenance Blockchain

<p class="is-style-lead">The US Federal Deposit Insurance Corp. (FDIC) issued a cease and desist letter to crypto exchange OKCoin over misleading statements regarding the exchange&#8217;s insurance status.</p>



<p>In a <a href="https://www.fdic.gov/resources/regulations/laws/section-18a4-of-fdi-act/letters/2023-06-15-okcoin-usa.pdf" target="_blank" rel="noopener">letter </a>dated June 15, the FDIC accused OKCoin and its senior executives of making false representations that certain crypto-related products were FDIC-insured.</p>



<p>The agency has ordered OKCoin to remove these misleading claims from its website, social media accounts, marketing materials, mobile app, and other customer-facing publications within 15 business days. Moreover, OKCoin must provide written confirmation assuring the FDIC of their prompt compliance.</p>




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<p>The FDIC&#8217;s deposit insurance is primarily intended to cover customers&#8217; deposits in the event of a failure of an FDIC-insured bank, offering a protective embrace of <a href="https://www.fdic.gov/resources/deposit-insurance/faq/" target="_blank" rel="noopener">up to $250,000</a>. However, this comforting security blanket doesn&#8217;t stretch to digital asset deposits.</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="The Untold Story - OKCoin Founder&#039;s Arrests, Struggles &amp; Triumphs" width="1020" height="574" src="https://www.youtube.com/embed/KRJ-JfO5zUY?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<p>The FDIC called out OKCoin on three instances where the exchange spun tales about its insurance status. These instances included a blog post advertisement suggesting that the exchange held licenses spanning the US and carried the coveted FDIC insurance for its accounts.</p>



<p>Additionally, OKCoin suggested that the Provenance Blockchain and its HASH utility token, available on the platform, had received regulatory approval from the SEC, OCC, FED, and the FDIC.</p>



<p>Lastly, OKCoin&#8217;s Chief Marketing Officer tweeted that the exchange provided FDIC insurance on USD deposits.</p>



<p>The statement from the regulator reads,</p>



<blockquote class="wp-block-quote">
<p>&#8220;OKCoin is not FDIC-insured and the FDIC does not insure non-deposit products. By not distinguishing between US-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.&#8221;</p>
</blockquote>



<h2 class="wp-block-heading" id="regulator-aligns-actions-with-prior-statements">Regulator aligns actions with prior statements</h2>



<p>This is not the first time the FDIC has taken action against crypto-related companies for falsely associating themselves with the institution. Last year, similar cease and desist letters were dealt to five exchanges, including <a href="https://crypto.news/fdic-issues-cease-and-desist-order-to-ftx-us-and-other-crypto-firms-over-misleading-information/">FTX.US</a> and <a href="https://crypto.news/u-s-banking-regulators-order-voyager-to-remove-misleading-insurance-statements/">Voyager Digital</a>.</p>



<p>In light of these recent developments, the FDIC has also published <a href="https://www.fdic.gov/news/financial-institution-letters/2022/fil22035b.pdf?source=govdelivery&amp;utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noopener">general guidelines</a> for crypto companies to follow when referencing the agency.</p>



<p>The guidelines clarify that FDIC insurance only protects customers in the event of a default, insolvency, or bankruptcy of a bank where the exchange holds an insured account. Furthermore, it explicitly states that neobanks are not covered by FDIC insurance.</p>




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FDIC cracks down on misleading insurance claims by OKCoin

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