US regulator accuses the OKCoin exchange of deceiving users

The FDIC ordered the platform to remove misleading statements about the agency’s insurance coverage of user accounts

16.06.2023 - 13:00

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What’s new? The Federal Deposit Insurance Corporation (FDIC) accused US crypto exchange OKCoin of “misleading statements” about deposit insurance. The regulator ordered the platform to remove the FDIC’s misleading insurance statements. If it fails to do so, OKCoin could face enforcement action for violating US banking laws, the corporation said in a letter to CEO Hong Fang.

The FDIC’s letter

More details about the situation. According to the FDIC’s letter, OKCoin did not distinguish “between US-dollar deposits and crypto assets, the statements imply FDIC insurance coverage applies to all customer funds (including crypto assets).”

The agency cited three examples of “false and misleading statements,” including a mention on its website that Provenance Blockchain’s HASH token on OKCoin has “received broad regulatory acceptance from the SEC, OCC, FED, and the FDIC.” In 2020, the exchange advertised itself as “Licensed across the US with FDIC insurance on OKCoin accounts.” The regulator also quoted a company spokesperson on Twitter as saying “if you are in the US we offer FDIC insurance on USD deposits[.]”

An OKCoin spokesperson in a comment to CoinDesk stated that “a core principle at OKCoin is to respect applicable laws and regulations, and we remain committed to collaborating with stakeholders including regulators.” According to him, “OKCoin is aware of this matter and is taking immediate action to assess the statements flagged by the FDIC and address them as necessary.”

The media previously reported that crypto exchange Gemini is under investigation by the New York State Financial Services Authority (NYDFS) for misrepresenting that its Earn crypto asset lending program is supported by the FDIC.

In March, OkCoin reported that it had temporarily suspended accepting US dollar deposits due to the collapse of three US banks: Silvergate, Silicon Valley Bank (SVB), and Signature.

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