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

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


To print this article, all you need is to be registered or login on Mondaq.com.

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
regulation.”

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.

POPULAR ARTICLES ON: Technology from United States

Property Rights In NFTs Are In The Spotlight

Wiley Rein

Interest in non-fungible tokens (NFTs) — unique digital assets created and sold on blockchains — have exploded in the past year. Buyers have paid many millions for these digital goods…

The Merge Is Upon Us: What It Means For Ethereum

Proskauer Rose LLP

As of this writing, the Ethereum “Merge,” one of the most anticipated events in blockchain history, is finally expected to occur in September 2022. The “Merge” will shift the Ethereum blockchain…

Source link

Share This
COMMENTS

Leave a Reply

Your email address will not be published.