FDIC Investigates Potential Violations of Federal Deposit Insurance Act by OKCoin USA Inc.
The Federal Deposit Insurance Corporation (FDIC) has initiated an investigation into OKCoin USA Inc. (OKCoin) and its senior executives for alleged false and misleading statements regarding the company's insured status. According to the FDIC's legal division, OKCoin may have violated Section 18(a)(4) of the Federal Deposit Insurance Act (FDI Act) and its implementing regulation, 12 C.F.R. Part 328, Subpart B.
The FDI Act and Part 328 prohibit individuals or entities from misrepresenting the insured status of deposits or knowingly providing false information about the extent and manner of deposit insurance. The FDIC has the authority to enforce these provisions, including issuing cease-and-desist orders and imposing civil money penalties.
The FDIC's investigation focuses on statements made by OKCoin on its website and social media platforms. The company's claims that it is "Licensed across the US with FDIC insurance on OKCoin accounts" and that it provides "FDIC insurance for all USD deposits" are under scrutiny. Additionally, OKCoin's Chief Marketing Officer made a social media post on Twitter stating, "If you are in the US we offer FDIC insurance on USD deposits."
These statements allegedly imply that OKCoin itself is FDIC-insured, that all customer funds, including crypto assets, are covered by FDIC insurance, and that the FDIC endorses a specific blockchain. However, the FDIC clarifies that OKCoin is not FDIC-insured and that the FDIC does not insure non-deposit products or endorse particular blockchains.
The FDIC has demanded corrective action from OKCoin, which includes the immediate removal of all statements that suggest FDIC insurance coverage in any form other than specified by the FDI Act. OKCoin is also required to cease making any false or misleading statements about its insured status while providing clear information about the insured depository institution (IDI) with which it has a relationship for deposit placement.
OKCoin has been given fifteen business days to respond to the FDIC's demands and provide written confirmation of compliance. Failure to respond or address the concerns raised may result in further actions being taken by the FDIC in accordance with the FDI Act.
The FDIC's investigation is limited to potential violations of Section 18(a)(4) and Part 328 of the FDI Act. The outcome of this matter may not affect the FDIC's assessment of other violations, nor does it prevent other federal or state agencies from pursuing actions related to potential violations of other laws and regulations.