By Nathan Ferguson
Recently, cease and desist letters have been issued by the Federal Deposit Insurance Corporation (FDIC) to 5 firms. The accusations raised against these platforms are of making wrong representations regarding the deposit insurance dealing with cryptocurrencies. A press release was issued by the FDIC on Friday revealing the cease and desist letters targeting the crypto exchange called FTX US as well as the websites Cryptosec, Cryptonews, FDICCrypto, and SmartAssets.
Cease and Desist Letters Issued by FDIC for FTX US and 4 other Crypto Firms
The respective letters were issued on Thursday. The government agency, in the respective letters, alleged the targeted companies of having detracted the common masses. The agency added that lied regarding particular crypto-related goods by saying that they were insured on the behalf of the FDIC. In the words of the government agency, such statements are misleading and false as the stocks kept in the exchanges’ brokerage accounts are not FDIC-insured.
The regulator moved on to note that some instant remedial measures should be taken to deal with the matter of these statements on social media-based accounts and websites of the venues. Recently, open concerns have often been voiced by the FDIC regarding the deficiency in non-bank entities’ insurance protection, taking into account the companies focused on cryptocurrencies.
In July, a notice has been issued by the regulatory agency for the U.S.-based banking institutions. It informed them that they require to evaluate as well as manage risks while establishing 3rd-party linkages with the providers of crypto services. It was repeated by the FDIC that, as the insured banks’ deposits were shielded against default for nearly $250,000, such a facility does not exist for the firms dealing with crypto.
Pat Toomey Cautions the FDIC over Its Crypto-Related Actions
As per the allegations, an excessively harsh attitude has been shown by the FDIC in the case of digital assets, as it has even moved ahead to discourage the banking organizations from operating with the providers of the crypto services. It was formerly reported that a letter was sent by Pat Toomey – Senator from Pennsylvania who additionally provides his services on the Senate Banking Committee – to the director as well as the acting chairman of the FDIC, Martin Gruenberg.
In that letter, Toomey stated that – according to his suspicion – the dealing of the FDIC with banks to discourage the banking organizations, from carrying out business dealings with the legally operating crypto firms, may not be appropriate.