The Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to 5 firms for purportedly making untrue representations about deposit insurance related to digital assets.
FDIC issued a press release disclosing cease and desist letters for virtual asset exchange FTX US and websites Cryptonews, SmartAssets, FDICCrypto, and Cryptosec. In the letters, which were issued on Thursday, the government agency claims that these firms misled the public about certain virtual asset-related products being insured by FDIC.
“These representations are false or misleading,” the FDIC mentioned in regard to “certain crypto-related products” being FDIC-insured or that “stocks held in brokerage accounts are FDIC-insured.” The regulator mentioned that these organizations must take immediate corrective action to address these incorrect or deceptive statements on their websites and social media accounts.
The Federal Deposit Insurance Corporation has been vocal about the absence of insurance protection for non-bank entities, which includes digital asset-focused firms. In the month of July, the regulator issued a notice advising banks in the United States that they need to assess and manage risks when forming 3rd party relationships with virtual asset service providers. The Federal Deposit Insurance Corporation reiterated that, while deposits at insured banks were protected against default for up to 250k USD, no such coverage exists for virtual asset firms.
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