InfoBytes Blog
FDIC issues CDO against five crypto companies
On August 19, the FDIC issued letters (see here, here, here, here, and here) to five companies demanding that they cease and desist from making crypto-related false and misleading statements regarding their FDIC deposit insurance status and take immediate corrective action to address these false statements. The FDIC noted that “each of these companies made false representations—including on their websites and social media accounts—stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.” Specifically, the FDIC noted that “a company offering a so-called cryptocurrency also registered a domain name that suggests affiliation with or endorsement by the FDIC,” calling such representations “false and misleading.” The FDIC said that the companies’ actions violated the FDI Act, which “prohibits any person from representing or implying that an uninsured product is FDIC–insured or from knowingly misrepresenting the extent and manner of deposit insurance,” and “further prohibits companies from implying that their products are FDIC–insured by using ‘FDIC’ in the company’s name, advertisements, or other documents.” The FDI Act authorizes the FDIC to enforce this prohibition against any person. The FDIC demanded that the companies take corrective actions by removing the misrepresentations or false statements and providing written confirmation to the FDIC that they have fully complied with the removal request.