Based in California, the OKX-affiliated crypto exchange OKCoin USA Inc. has received a letter from the FDIC urging it to stop using the agency’s name to bolster its legitimacy or else.
Potential FDIA Violation
The letter, addressed to OKCoin CEO Hong Fang, warned the exchange that it is in potential violation of Section 18(a)(4) of the Federal Deposit Insurance Act (FDIA).
This section of the FDIA prohibits companies and individuals from claiming that an uninsured or potentially uninsured deposit is actually covered by the FDIC, whether in promotional materials or documents. In the case of OKCoin, the FDIC has now clearly stated that insurance is not provided.
“OKCoin is not FDIC-insured and the FDIC does not insure non-deposit products. By not distinguishing between US-dollar deposits and crypto assets, the statements imply FDIC insurance coverage applies to all customer funds (including crypto assets). In addition, the FDIC does not insure or endorse particular blockchains. Accor
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