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WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) today issued letters demanding two entities, CEX.IO Corp. (a cryptocurrency exchange) and Zera Financial (a non-bank financial service provider) cease and desist from making false and misleading statements about FDIC deposit insurance and take immediate corrective action to address these false or misleading statements. Additionally, the FDIC directed two websites, Captainaltcoin.com and Banklesstimes.com, to remove similar false and misleading statements about the FDIC-insured status of CEX.IO.
Based upon evidence collected by the FDIC, these entities made false representations, stating or suggesting that CEX.IO and Zera Financial are FDIC–insured, that FDIC insurance will protect customers’ cryptocurrency, or that that FDIC-insurance would protect customers in the event of Zera Financial’s failure. These representations are false and misleading.
FDIC Chairman Martin J. Gruenberg commented on an observed increase in these kinds of misrepresentations and their impacts on consumers. “These practices not only harm those who are targeted with the false promise of deposit insurance, but, if left unchecked, could also undermine confidence in the FDIC, FDIC-insured banks, and the U.S. banking system.”
The Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured product is FDIC–insured or from knowingly misrepresenting the extent and manner of deposit insurance. The FDI Act further prohibits companies from implying that their products are FDIC–insured by using “FDIC” in the company’s name, advertisements, or other documents. The FDIC is authorized by the FDI Act to enforce this prohibition against any person.
FDIC deposit insurance protects customers in the unlikely event of the failure of an FDIC–insured bank. To determine if an institution is FDIC–insured, you can ask a representative of the institution, look for the FDIC sign at the institution, or use the FDIC’s BankFind tool. For general information about FDIC deposit insurance, read the following frequently asked questions. For more information about FDIC insurance and crypto companies, read the following fact sheet.
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