FDIC Serves Five Crypto Firms With Cease and Desist Orders 1

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FDIC Serves Five Crypto Firms With Cease and Desist Orders 1

The Federal Deposit Insurance Corporation (FDIC) has criticized five companies dealing with digital assets with cease and desist orders. According to statement from the regulatory agency, said companies were making false claims about insuring digital assets. The company released the statement on Friday, addressing it to the companies in question, including heavyweight FTX US. Other companies mentioned in the statement include Cryptonews, SmartAssets and others.

The agency said the companies lied to investors

According to the FDIC statement, the above companies lied to investors about certain crypto-related investments they insure. The agency mentioned that the information given to the public about the products is false. She also mentioned that the agency did not insure the said products.

The FDIC also reiterated that it does not insure stocks currently in brokerage firm accounts. In the letter, the agency warned companies against such misleading information and urged them to do the right thing for their users. He also warned the said companies to correct the stories and remove false and untrue statements about the products they insure on their websites, blogs and social accounts.

FDIC Takes Strong Stance Against Crypto Companies

The FDIC has consistently issued warnings to businesses in the crypto market about their lack of assurance over the past few years. A few months ago, the agency warned several banks across the country about assessing and mitigating risk when going into business with crypto firms. This is because most companies do not have insurance covering them. To reinforce this point, the agency mentioned that while banks have coverage in terms of insurance for around $250,000 in deposits, the digital asset exchange has none.

There have also been allegations that the agency has gone against crypto in recent years after various messages were targeted to discourage banks from forming working relationships with several digital exchanges. A few months ago, a senator sent a letter to the FDIC explaining some claims made by a whistleblower in this regard. In that letter, Senator demand why the agency opposes banks that establish working relationships and partnerships with legal digital exchanges. He noted that the whistleblower says the body is taking all necessary steps to ensure such relationships never materialize.

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