Cryptocurrency platforms seem to be in the focus of US regulators lately. The most recent development towards this came with a cease and desist order from the US insurance agency, the Federal Deposit Insurance Corporation (FDIC). A crypto exchange received a notice from the FDIC on Feb. Here are the details…
Cryptocurrency exchange received notification from FDIC
Cryptocurrency exchange CEX.IO has received a halt order from the FDIC, as seen in a letter released by the US regulator on Feb. The legal division of Federal Deposit Insurance Corporation said CEX.IO has made false or misleading statements suggesting that the FDIC has insured it. “The dollars held in your US CEX.IO fiat money wallet are FDIC insured up to $250,000 per account without qualification,” the official website of CEX.IO states.
However, the FDIC says that CEX.IO itself is not insured. He called the above statement misleading as it did not identify insured depository institutions (IDIs) with which CEX.IO has a direct or indirect relationship. While CEX.IO can deposit funds into such an institution, its users’ assets are not necessarily insured in this way. Therefore, the FDIC has requested that CEX.IO remove all statements to that effect. The regulator has also instructed two independent websites (Captain Altcoin and Bankless Times) to correct statements suggesting CEX.IO is insured by the FDIC.
FDIC move garners praise from Warren
The FDIC also said that one of these claims falsely implied that crypto assets could be federally insured. This complaint does not appear to apply to CEX.IO’s own website, which states that since at least 2021 federal insurance does not apply to virtual assets. CEX.IO is a relatively small exchange with a 24-hour volume of just $4.3 million. For comparison, Binance, the world’s largest crypto exchange, has a trading volume of just over $25 billion in the last 24 hours. As we reported as Kriptokoin.com, the FDIC has sent similar notices to other crypto companies. Last year, he sent a warning to FTX.US and Voyager Digital over their insurance coverage.
The FDIC letter also stated that if the exchange has an FDIC-insured account, the insured depository holding the funds must be named. The letter, signed by FDIC deputy general counsel Seth Rosebrock, quotes the Federal Deposit Insurance Act throughout. The FDIC’s insistence that crypto should not be insured garnered praise from US Senator Elizabeth Warren, who is a crypto skeptic. The institution was also one of three people to sign a recent statement warning banks of the dangers of cryptocurrency.
Outside of the FDIC’s move, NYFDS issued a halt order for Paxos, the issuer of Binance’s stablecoin, BUSD. Also recently, the US Securities and Exchange Commission (SEC) announced that some cryptos are securities and will act towards it.
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