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Financial Services Law Insights and Observations

FDIC, Fed issue CDO against crypto brokerage firm

Bank Regulatory FDIC Federal Reserve Cryptocurrency Deposit Insurance FDI Act

On July 28, the FDIC and the Federal Reserve Board issued a joint letter demanding that a crypto brokerage firm cease and desist from making false and misleading statements regarding the company’s FDIC deposit insurance status and take immediate corrective action to address these false statements. The agencies claimed that the firm made false and misleading representations online, including on its website, stating or suggesting that: (i) it is FDIC–insured; (ii) customers who invested with the firm’s cryptocurrency platform would receive FDIC insurance coverage for all funds provided to, and held by, the firm; and (iii) the FDIC would insure customers against the failure of the firm. The FDIC noted that the false and misleading statements Violate the FDIC Act. The FDIC demanded that the firm take corrective actions by removing the misrepresentations or false statements and provide written confirmation to the FDIC and Board of Governors that it has fully complied with the removal request within two days.

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