By James Davis
A notice shared on the FDIC (United States Federal Deposit Insurance Corporation) website shows that the agency sent a cease-and-desist order to Unbanked on August 4, accusing the crypto company of making misleading and false claims regarding its insurance status.
In the document, the FDIC stated that Unbanked, a crypto debit card issuer, misled its users by lying to them that the agency insures cryptocurrencies deposited into its platform.
Unbanked is no longer in business as of this writing. The company announced in June its plans to shut down operations. At the time, it advised users to withdraw their crypto assets from the platform within 30 days.
In its announcement, Unbacked told customers its failed $5.5 million investment fueled its decision to shut down. However, the crypto firm said it will restart immediately after recovering the lost funds or when it finds new investors.
The FDIC Order
Meanwhile, the FDIC wants Unbacked to remove all statements on its website suggesting that deposited cryptocurrencies are protected by the agency. The FDIC has given the company two weeks to submit a written confirmation showing it has complied with the issued order and expressed its commitment to stop making similar statements when it resumes operations.
In his response to the FDIC’s order, the unbanked founder Daniel Gouldman said his firm was willing to comply with the agency’s request. He also explained that the FDIC may have misinterpreted Unbanked’s statement, arguing that his company only offered users bank accounts from its FDIC-insured banking partners, allowing them to trade crypto assets in a more protected manner.
FDIC Targets More Crypto Firms Over False Insurance Claims
Unbanked is not the first crypto firm the FDIC has targeted for making claims that the agency insures crypto deposits. Last year, it launched investigations into now-fallen crypto lender Voyager after the firm alleged that its crypto assets were FDIC-insured. It was discovered that only Voyager’s banking partner Metropolitan Commercial Bank was insured by FDIC.
In late June, the agency demanded crypto exchange OKCoin cease making misleading statements regarding the firm’s insurance status through its promotional channels and website.