The US banking agency confirmed that OKCoin is not protected by the FDIC agency.
OKCoin is a sister firm of OKX exchange, an international crypto trade platform. In 2013, Star Xu founded this platform. The services of this exchange are available in the US also, where the customers can easily trade US dollars, euros, and Japanese yen against Bitcoin, Litecoin, Ethereum, and other flagship crypto assets.
On 15 June 2023, American banking regulator U.S. Federal Deposit Insurance Corp. (FDIC) issued a cease & desist order against the OKXCoin.
The FDIC agency noted that OKCoin claims that it’s protected & insured by the FDIC, which is not a truth. Further, the banking regulator ordered OKCoin to remove such misleading & false statements from its website.
Agency’s letter read:
“OKCoin is not FDIC-insured and the FDIC does not insure non-deposit products,” the agency said in its cease-and-desist demand. “By not distinguishing between U.S.-dollar deposits and crypto assets, the statements imply FDIC insurance coverage applies to all customer funds (including crypto assets).”
Earlier this, similar kinds of orders were sent by the FDIC agency to the FTXUS & Voyager Digital (both of these two firms had collapsed & filed for bankruptcy).
An Okcoin spokesperson: “A core principle at Okcoin is to respect applicable laws and regulations, and we remain committed to collaborating with stakeholders including regulators whenever possible. Okcoin is aware of this matter and is taking immediate action to assess the statements flagged by the FDIC and address them as necessary.”
Through the latest order, FDIC confirmed that the agency insures & protects only banks, while crypto firms & crypto assets are outside of its authority.
Note: OKX is owned by OK Group, which also owns crypto exchange Okcoin. Only OKCoin’s services are available in the US, not OKX.
US regulators vs crypto firms
In the last 5-6 months, the majority of the top crypto firms faced high-level legal pressure. More than half a dozen crypto firms received Wells notice and/or sued by the United States Securities Exchange Commission (SEC).
Last week, the SEC agency sued top-regulated crypto exchange Coinbase, BinanceUS, Binance ( not under US jurisdiction), and Binance CEO Changpeng Zhao (CZ).
Just a few days ago, a US lawmaker introduced a bill to remove the SEC chairman Gary Gensler from the SEC agency, as the agency initiated enforcement actions against crypto firms without providing proper clarity on the laws.
Bill to remove Gensler from the SEC doesn’t mean that Gensler will leave the regulatory body, as there are no laws to force any official to remove from the independent regulatory body, except in some circumstances.