- OKCoin made some claims that ruffled the feathers of FDIC
- The regulator has asked the exchange to delete the misleading statement from its website
OKCoin, a cryptocurrency exchange that offers trading with all the leading coins, has been in the soup lately. Recently, the deal gave a statement regarding customer account protection which hasn’t gone well with the regulators. The US Federal Deposit Insurance Corp. (FDIC) has ordered the exchange to remove any misleading statement from its website.
A warning was sent to seek corrective actions.
The government body has sent a warning letter to the CEO, Hong Fang. The letter says the company would face punitive actions if it does not comply with the rules. This is not the first time the exchange has received such a claim. According to the regulator, OKCoin is not authorized to insure non-deposit products as it is not FDIC-insured.
And still, it has claimed that it can do so, for which the exchange has received a cease and desist notice. The agency says the firm has not discerned between crypto assets and US dollar deposits. As a result, the statements on companies website insinuate that FDIC insurance coverage applies to all customer funds, including crypto.
In an official statement, the regulator mentioned three instances where the company made misleading claims. One says that the platform’s proprietary token has received acceptance from FDIC, SEC, FED, and OCC. Also, in 2020, the company posted on its website that it has the license to offer FDIC insurance on its tokens. Moreover, one of its Twitter posts said that its US customers could avail of FDIC insurance on USD deposits.
Previous similar incidents
Also, the CEO didn’t respond when asked for a comment immediately. It should be noted that the regulator issued similar orders to Voyager Digital and FTX.US. Both companies are now bankrupt. At that time, the CEO, Brett Harrison, tweeted that the regulator insured their company. Also, the FDIC has warned the entire crypto space to be mindful before posting anything related to assurances to its customers. They said that FDIC protections cover only FDIC-insured bank accounts, not crypto firms.
The incident draws our notice to practices that crypto firms adapt to establish credibility among investors. However, many of them make false claims and invite legal trouble. So the bigwigs of the crypto firms need to be responsible while making public statements, especially when several big exchanges are under regulatory scrutiny.
We know the SEC and crypto firms have developed quite an enmity lately. So drawing more criticism from other regulators only worsens the whole situation. The only thing that exchanges can do right now is offer what they can while maintaining transparency. Making false claims would drag the companies down and wouldn’t bear good results for their future.
Conclusion
The exchanges must be prudent and careful about what they say. Besides that, governments are taking steps toward regulating digital assets. Many other difficulties will be wiped out from the industry when that happens. With new regulations, businesses will surely get a new direction. They will be able to embrace crypto to the best of their ability. Moreover, the technology will probably become mainstream too.
