- No FDIC protection for OKCoin customer accounts
- Regulator demanded immediate action to correct claims
- FDIC sent similar warnings to FTX.US and Voyager before their bankruptcies
The US Federal Deposit Insurance Corp. (FDIC) complained that crypto platform OKCoin was making misleading statements, erroneously suggesting the financial regulator protected customers’ accounts, and ordered them to remove the false claims from their site.
OKX’s affiliate might face enforcement action
OKCoin, which is OKX’s sister exchange, has to remove the misleading claims from its site at once or face enforcement action for legal violations, the FDIC wrote in a letter to OKCoin’s CEO Hong Fang. The letter, which is one of a series of warnings by the FDIC to crypto firms, states:
The Federal Deposit Insurance Corporation has reason to believe that OKCoin USA Inc. and its senior executives have made false and misleading statements, directly or by implication, concerning OKCoin’s insured status, in violation of section 18(a)(4) of the Federal Deposit Insurance Act. We hereby demand that you cease and desist and take immediate corrective action to address these false and misleading statements.
Regulatory acceptance disputed
The first false claim was that OKCoin’s HASH token had been accepted by regulators such as the SEC, FED, OCC, and the FDIC. Furthermore, the company advertised itself on its website as holding a US-wide license and insisted all OKCoin customer accounts were FDIC-insured. The company also tweeted that they offered US-based customers FDIC insurance on US dollar deposits.
FDIC protection is only for banks
In the past, the FDIC has sent similar letters to platforms like FTX.US and Voyager Digital, both of which are now bankrupt. Brett Harrison, the former CEO of FTX’s US arm, had suggested the regulator’s protection covered the company.
The FDIC has repeatedly pointed out that its protection is only for banks, not crypto companies that hold FDIC-insured accounts with banks.
OKCoin told CoinDesk in an email:
We remain committed to collaborating with stakeholders including regulators whenever possible. OKCoin is aware of this matter and is taking immediate action to assess the statements flagged by the FDIC and address them as necessary.
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