WASHINGTON — The Federal Deposit Insurance Corp. sent cease-and-desist letters on Wednesday to four crypto platforms over what the agency said were false claims and representations about their products' deposit insurance coverage.
Following an investigation, the FDIC found that two financial technology companies — CEX.IO Corp. and Zera Financial — falsely claimed their deposits were FDIC insured. In Wednesday's letters, FDIC directed each platform to stop claiming to be FDIC-insured entities, cease representing that FDIC insurance protects their customers' cryptocurrency balances, or that such insurance would protect customers in the event of institutional failure. In addition, the agency directed two websites Captainaltcoin.com and Banklesstimes.com to correct their false claims that CEX.IO is FDIC-insured.
FDIC Chairman Martin J. Gruenberg has long expressed his concern about the uptick in
"These practices not only harm those who are targeted with the false promise of deposit insurance, but, if left unchecked, could also undermine confidence in the FDIC, FDIC-insured banks, and the U.S. banking system," Gruenberg said.
The FDIC's Deposit Insurance Fund, established under the Glass-Steagall Act in 1933, guarantees that customer deposits will be made whole in the event of an FDIC-insured bank's failure. In 1950, the Federal Deposit Insurance Act empowered FDIC to crack down on companies who make false claims of being insured and use logos to suggest uninsured products are FDIC-backed.
The FDIC has been increasingly vigilant about such representations by crypto firms in recent years. Last July, the agency sent
