FDIC warns CEX.IO and its reviewers to remove potentially false claims about insurance

The United States Federal Deposit Insurance Corporation (FDIC) has sent a missive to executives of cryptocurrency speech CEX.IO warning them that they are perchance successful usurpation of national instrumentality owed to mendacious and misleading statements astir the exchange’s security status. The bureau has fixed the speech 15 days to marque corrections.

The connection successful question is recovered successful the tiny people details of the exchange’s authorities wealth transmitter licence information. The accusation for Rhode Island reads, “U.S. dollars held successful your CEX.IO fiat currency wallet are FDIC-insured up to $250,000 per account.”

The FDIC missive besides noted that, if the speech has an FDIC-insured account, the insured depository instauration holding the funds indispensable beryllium named. The letter, signed by FDIC adjunct wide counsel Seth Rosebrock, cites the Federal Deposit Insurance Act throughout. The missive clarified:

“CEX is not FDIC-insured, and FDIC security does not support cryptocurrency oregon immoderate assets different than U.S. dollar deposits held astatine IDIs [insured depository institutions].”

The FDIC demanded that CEX.IO region statements that connote it has FDIC insurance, cease and desist from making immoderate statements to that effect and clarify immoderate statements relating to “pass-through security arising from the placement of funds successful accounts astatine IDIs.”

Related: New York fiscal regulator investigates Gemini implicit FDIC claims: Report

The agency, which is an autarkic bureau created by the U.S. Congress and financed by security dues, said that enforcement actions it mightiness instrumentality see the issuance cease-and-desist orders and appraisal of civilian monetary penalties.

Today, we issued letters demanding 4 entities halt making mendacious and misleading statements astir FDIC deposit security and to close these falsehoods. Read much ➡️ https://t.co/TqdIZkD502. pic.twitter.com/K1qkUBjP0Z

— FDIC (@FDICgov) February 15, 2023

The FDIC besides recovered 2 websites with reviews of CEX.IO that claimed the speech had FDIC insurance. It sent letters demanding analogous changes to those statements arsenic well. One of the websites, Bankless Times, is based successful the United Kingdom.

The FDIC’s insistence that crypto should not beryllium insured has garnered praise from crypto skeptic Sen. Elizabeth Warren. The bureau was besides 1 of the 3 signatories of a caller statement informing banks of the dangers of crypto.