The United States Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to five crypto-related companies. According to the FDIC, these companies were making misleading statements about their crypto-related products being FDIC-insured.
In its letter, the Federal Deposit Insurance Corporation has demanded these companies, their officers, directors, and employees immediately cease and desist from making untrue claims about FDIC deposit insurance. The government agency further demanded, “immediate corrective action to address these false or misleading statements.”
The five companies that have received these letters include Cryptonews.com, SmartAsset.com, Cryptosec.info, FTX US, and FDICCrypto.com.
As per the official press release of the FDIC, “Based upon the evidence gathered by the FDIC, each of these companies made false representations on their websites and social media accounts. They stated or suggested that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.”
According to the Federal Deposit Insurance Act, claiming or even suggesting that an uninsured product is FDIC-insured is strictly prohibited. The Act also prohibits companies from using the name “FDIC” in their name, advertisement, and documents. It is an offense that can result in severe financial or other consequences.
The main goal of the FDIC deposit insurance is to protect the consumers’ interest in case any FDIC-insured bank fails. Citizens must do thorough research and background check before believing that any institution is FDIC-insured. The government agency recommends that consumers use the BankFind tool to locate FDIC-insured banks in their region.
