- The regulatory body has given the exchange 15 days to make the necessary adjustments.
- It may issue cease-and-desist orders and levy civil monetary fines.
Executives of cryptocurrency exchange CEX.IO have received a letter from the United States Federal Deposit Insurance Corporation (FDIC). Notifying them that they may have broken federal law by making false and misleading claims regarding the exchange’s insurance status.
The regulatory body has given the exchange 15 days to make the necessary adjustments. The relevant declaration may be found in the fine print of the exchange’s state money transmitter licensing data.
The statement read:
“U.S. dollars held in your CEX.IO fiat currency wallet are FDIC-insured up to $250,000 per account.”
If the exchange maintains an FDIC-insured account. The depository institution where the monies are held must be specified in the FDIC’s correspondence. It is clear that Seth Rosebrock, assistant general counsel at the FDIC, relied heavily on the Federal Deposit Insurance Act while writing this letter.
Enforcement Measures Expected
The FDIC requested that CEX.IO explain any representations referring to “pass-through insurance arising from the placement of funds in accounts at IDIs,” as well as delete any comments that indicate it has FDIC protection.
The agency, which was established by the United States Congress and is funded by insurance premiums, has indicated that it may issue cease-and-desist orders and levy civil monetary fines as enforcement measures.
Moreover, two of the websites the FDIC reviewed claimed that CEX.IO was FDIC-insured. Similarly, it sent letters requesting revisions to those assertions. Bankless Times is one such site that operates out of the UK.
Furthermore, Elizabeth Warren, a crypto sceptic, praised the FDIC’s stance that cryptocurrencies should not be insured. Additionally, the agency was one of three organizations that recently issued a statement warning financial institutions about the risks associated with cryptocurrency.
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