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Cease And Desist To Companies Making Crypto-Related Representations Following Warnings By Government – Fin Tech

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The FDIC has issued cease and desist letters (C&Ds) to
five companies and their officers, directors, and employees for
making crypto-related false or misleading representations about
deposit insurance and to take immediate action to address the
statements. The action taken on August 19, 2022 comes after
multiple government agencies have issued warnings about the
marketing of crypto.

In May, the Consumer Financial Protection Bureau (CFPB)
and the Federal Deposit Insurance Corporation (FDIC)
warned cryptocurrency companies and fintechs to stop making
misrepresentations that cryptocurrencies stored with brokerages are
FDIC-insured and protected by the government.

According to the FDIC:

  • “Based upon evidence collected by the FDIC, each of these
    companies made false representations-including on their websites
    and social media accounts-stating or suggesting that certain
    crypto-related products are FDIC-insured or that stocks held in
    brokerage accounts are FDIC-insured.”

  • “In one case, a company offering a so-called
    cryptocurrency also registered a domain name that suggests
    affiliation with or endorsement by the FDIC.”

  • “The representations are false and misleading.”

At least two of the companies receiving C&Ds operate
websites that each identified one of the other companies in receipt
of a C&D as “FDIC-insured.”

The letters read “failure to respond to this letter may
result in the FDIC taking appropriate action as authorized under
the Federal Deposit Insurance Act and any other applicable law or

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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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