The Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to five companies, asking them to cease making false and misleading statements about FDIC deposit insurance.
The FDIC also requested that the five companies take immediate corrective action to address the False or misleading statements by multiple officers, directors, and employees
Evidence gathered by the FDIC purportedly indicates that each company states or implies that certain cryptocurrency-related products are FDIC-insured, Or the stock held in the brokerage account is FDIC – insured.
FDIC FALSE AFFILIATED CLAIM
The companies involved are Cryptonews, Cryptosec, SmartAsset, FTX US and FDICCrypto. The companies made false statements on their websites and social media accounts, the FDIC said. As you can see from one of the company names, one of the companies also registered a domain name that implied an FDIC relationship but didn’t actually exist.
The Federal Deposit Insurance Act (FDI Act) prohibits any person or entity from representing or implying that an uninsured product is covered by the FDIC. Deliberate misrepresentation of the extent and manner of any deposit insurance the product has is also prohibited. In addition, companies are prohibited from implying that their products are FDIC insured by using the letters “FDIC” in their company name, advertising, or any other document.
The FDI Act authorizes the FDIC to enforce these prohibitions against any person or entity, such as the five companies mentioned above.
FDIC’s Cease and Desist Letter
The FDIC’s stern letter to Cryptonews reads: “The Federal Deposit Insurance Corporation (FDIC) has reason to believe that Cryptonews.com, by its officers, directors and employees (collectively, “Cryptonews”), has Deposit Insurance Making False and Misleading Statements in Violation of Section 18(a)(4) of the Federal Deposit Insurance Act, Federal Deposit Insurance Act (FDI Act), 12 USC and 1828(a)(4) and its implementation Regulations, 12 CFR Part 328, Subpart B (Part 328). We hereby request that you cease and desist and take immediate corrective action to address these false and misleading statements, as set forth more fully below.
“Section 18(a)(4) of the Foreign Direct Investment Act, 12 USC and 1828(a)(4) and Part 328 prohibits anyone from using the FDIC’s name or logo or similar term to denote or imply that no Insured deposit liabilities, obligations, certificates or shares are insured, or a deliberate misrepresentation of the extent and manner in which deposit liabilities, obligations, certificates or shares are insured under the FDI Act. The FDIC has the authority to enforce these rules against any person or entity. The enforcement tools available to the FDIC include the power to issue cease and desist orders and assess civil penalties for violations of Section 18(a)(4) and Part 328. “
Corrective action includes removal of all FDIC deposits that may imply affiliation or endorsement.
What is an FDIC deposit Insurance?
FDIC deposit insurance is a form of protection for customers in the event of a failure of an FDIC-insured bank. To determine whether an institution is legitimate To be FDIC-insured, first ask the agency’s representative or look for the FDIC logo at the agency’s online or on-site location. You can then use the FDIC’s BankFind tool.
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