The Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to five companies for allegedly making false claims about cryptocurrency-related deposit insurance.
The FDIC issued a press release on Friday revealing cease and desist letters for the cryptocurrency exchange. US FTX and websites SmartAssets, FDICCrypto, Cryptonews and Cryptosec. In the letters, which were issued Thursday, the government agency alleges that these organizations misled the public about certain cryptocurrency-related products that were FDIC-insured.
“These representations are false or misleading,” the FDIC said regarding “certain cryptocurrency-related products” being FDIC insured or “shares held in brokerage accounts being FDIC insured.” The regulator said these companies must “take immediate corrective action to address these false or misleading statements” on their websites and social media accounts.
The FDIC has echoed the lack of insurance protection for non-bank entities, among which are companies dedicated to cryptocurrencies. In July, the regulator issued an advisory warning U.S. banks to assess and manage risks when entering into relationships with third-party crypto asset service providers. The FDIC reiterated that while deposits at insured banks were protected against default up to $250,000, there is no such coverage for crypto businesses.
It has been alleged that the FDIC has taken an overly strict approach to digital assets, going so far as to discourage banks from doing business with cryptocurrency service providers. As Cointelegraph reported, Pennsylvania Sen. Pat Toomey, who is also on the Senate Banking Committee, sent a letter to FDIC Acting Chairman and Director Martin Gruenberg informing him of the allegations made by a whistleblower. . In the letter, Toomey said he suspects the FDIC “may be taking improper steps to discourage banks from doing business with legitimate cryptocurrency-related businesses.”
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