OKCoin Accused by FDIC of Making False Claims About Customer Protections

OKCoin must scrub misleading statements that suggest its customers’ accounts are protected by the U.S. Federal Deposit Insurance Corp. (FDIC), the U.S. banking regulator ordered late Thursday, complaining the company is making false claims.

The FDIC has demanded OKCoin USA Inc., the San Francisco-based sister exchange to OKX, remove any offending claims from its site immediately or face a possible enforcement action for violating U.S. banking law, the FDIC said in its letter to CEO Hong Fang. It’s the latest of several such warnings to crypto firms from the banking watchdog.

“OKCoin is not FDIC-insured and the FDIC does not insure non-deposit products,” the agency said in its cease-and-desist demand. “By not distinguishing between U.S.-dollar deposits and crypto assets, the statements imply FDIC insurance coverage applies to all customer funds (including crypto assets).”

The agency cited three examples of “false and misleading representations,” including a mention on its website that the Provenance Blockchain’s HASH token on OKCoin had “received broad regulatory acceptance from the SEC, OCC, FED, and the FDIC” and a  2020 posting to the company’s website, where it advertised itself as “Licensed across the US with FDIC insurance on OKCoin accounts.” It also cited a company official’s Twitter post that “if you are in the US we offer FDIC insurance on USD deposits.”

A request for comment sent to the CEO late Thursday wasn’t immediately answered.

The regulator previously sent similar orders to now-bankrupt Voyager Digital and to FTX.US, after then-CEO Brett Harrison suggested in a tweet that the company was covered by the regulator. The FDIC had also issued a broader warning to the crypto sector, saying FDIC protections focus only on banks, not crypto firms that have FDIC-insured bank accounts.