FDIC Warns 5 Companies About Statements Around Deposit Insurance

The Federal Deposit Insurance Corporation (FDIC) reported Friday (Aug. 19) that it has issued letters to five companies demanding that they cease and desist from making what it says are “false and misleading statements” about FDIC deposit insurance and take corrective action to address statements it has identified.

“Based upon evidence collected by the FDIC, 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,” the agency said in a press release.

The FDIC said it sent letters to Cryptonews.com, Cryptosec.info, SmartAsset, FTX US and FDICCrypto.com.

PYMNTS has requested comment from the five companies by emailing them at the addresses to which the FDIC said it sent emails.

A CryptoSec spokesperson told PYMNTS in an emailed reply that it was not clear why its article was seen as misleading, adding that CryptoSec had “made it clear that no crypto is being insured by these exchanges, only the USD balances.”

Cryptonews CEO Gediminas Klepackas told PYMNTS in an email that the company thanks the FDIC for bringing this matter to its attention, that it has removed articles containing potentially misleading mentions of FDIC-related partnerships and that it will not mention anything related to this matter in a potentially misleading manner again.

“In this case, our intended message was to highlight the fact that exchanges like Coinbase, Crypto.com, Gemini, and eToro have worked with FDIC-insured banking institutions, not that they were FDIC-insured themselves,” Klepackas said in the email. “We apologize to anyone who misinterpreted it.”

Among the representations identified by the agency in one or more of the letters are reviews of cryptocurrency exchanges that make representations about the availability of deposit insurance, a hyperlink entitled “FDIC-Insured Crypto Exchanges,” an article entitled “List of FDIC-Insured Crypto Exchanges,” a tweet that refers to “FDIC-insured bank accounts” and a domain name that the agency says makes false representations.

Federal agencies have recently brought up this issue with other companies as well.

In July, the FDIC issued bankrupt crypto lender Voyager Digital a warning to stop “making false or misleading representations” implying that its customers’ funds are FDIC insured.

Read more: FDIC’s Warning to Voyager Spotlights Broader Concerns about Insuring Crypto

In May, the Consumer Financial Protection Bureau (CFPB) issued a press release saying it had released an enforcement memorandum saying firms can’t misuse the FDIC’s name or logo or make deceptive representations for deposit insurance. The release didn’t name any companies.

See also: CFPB Warns Businesses Not to Misrepresent FDIC Insurance

As PYMNTS reported at the time, the issue has emerged with the popularity of crypto assets and stablecoins, which investors may think are covered by the FDIC.