FDIC warns CEX.IO client funds are not insured

abdelaziz Fathi

The Federal Deposit Insurance Corporation (FDIC) has issued a cease-and-desist letter to Illinois-based crypto exchange CEX.IO to stop falsely claiming that its client funds are insured by the government.


The agency said that the exchange failed to distinguish the FDIC status of its own bank deposits and customers’ funds after a section of its website inaccurately states that “U.S. dollars held in your CEX.IO fiat currency wallet are FDIC-insured up to $250,000 per account.”

“No qualifications, clarifications or limitations are made in connection with this representation, and no insured depository institution or institutions (IDIs) are identified in connection with this statement,” the FDIC noted in its letter.

Under the Federal Deposit Insurance Act, it’s prohibited to use the FDIC’s name or logo to imply customer funds are government insured when they are not. The agency also has the authority to assess civil money penalties against anyone “implying that an uninsured product is FDIC–insured or knowingly misrepresenting the extent and manner of deposit insurance.”

The FDIC demanded that remove any statements or references anywhere that suggest the exchange is FDIC-insured and that any funds held in crypto by it are protected by FDIC insurance.

In a warning to CEX.IO, the FDIC mentioned misrepresentation of FDIC coverage and ordered the firm to remove such false and misleading statements about the FDIC-insured status.

The FDIC ramped up its efforts to police crypto firms that may be misleading investors on whether their funds enjoy a government backstop. It has issued cease and desist letters to five crypto firms, including bankrupt FTX and Voyager Digital, to stop making similar misleading statements. Later, the FDIC urged banks dealing with crypto companies to ensure that their customers are aware of what types of assets are government-insured.

The New York Department of Financial Services (NYDFS) is also investigating Winklevoss-owned exchange Gemini over its communications with Earn customers which contained ambiguous terminology that their GUSD stablecoin deposits are protected by FDIC.

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.”

CEX.IO holds a money service business (MSB) status with the Financial Crimes Enforcement Network (FinCEN), which allows a company to act as a money transmitter in the United States with a stringent independent annual audit.

Since 2015, CEX.IO’s trading services have been available in the US with a growing number of Money Transmitter Licenses under their belt.

Read this next

Retail FX

Scope Markets launches unleveraged trading

“Whilst our traditional contract for difference (CFD) products continue to prove incredibly popular, the Invest account is unleveraged and only allows ‘long’ positions to be taken, a combination that significantly reduces the risk of capital losses.”


Unlocking Profit Potential: Earn Returns with DecodeEX Experience Bonus!

DecodeEX, the innovative brokerage subsidiary of Decode Global, announced its experience bonus campaign, offering every user the opportunity to maximize their strategic trading potential with up to $10,000 in experience bonus. 

Market News

Pretiorates’ Thoughts 28 – Precious metals and base metals out of control

Ten days ago we mentioned in Pretiorates’ Thoughts 26: Chapter 2 should start with Precious Metals.

Retail FX

Webull launches discount brokerage in Malaysia

“Making investing more inclusive and accessible to all, Webull Malaysia brings best-in-class tools and information to empower investors of all levels with knowledge and skills to help them make better investment decisions and achieve their investment goals.”

Digital Assets

Hidden Road adds OKX’s Nitro Spreads into prime brokerage

“Hidden Road continually seeks to increase market access and capital efficiency through expanded prime brokerage offerings. Integrating OKX’s Nitro Spreads product builds upon this philosophy by extending our counterparties’ ability to execute risk-managed arbitrage strategies.”


Dev Release 31: BlockDAG’s SHA-3 Upgrades Propel Crypto Mining Innovation as Miner Sales Approach 5800 Units

Learn about BlockDAG’s 31st Development Release, which includes advanced SHA-3 updates and a significant increase in miner sales, driving advancements.


BlockDAG Dominates 2024 Crypto Trends: Surpasses $28M in Presales Amid Strategic Partnerships

Explore BlockDAG, Shiba Inu, and Kaspa Killer’s rise in 2024’s crypto market, focusing on BlockDAG’s $28M presales, strategic partnerships, and innovative technology.


BlockDAG’s $30 by 2030 Valuation Prediction and Roadmap Reveal Gains Traction From Filecoin and XLM Investors

Discover why BDAG’s $30 price prediction by 2030 outshines Filecoin Investors’ hopes and XLM’s recent surge with a booming presale and clear roadmap.


BlockDAG Captures $28 Million in Presale, Drawing Investors Away from Ethereum and Bitcoin

Explore how BlockDAG’s revamped dashboard led to a $28 million presale boost, while Ethereum sees a downturn and Bitcoin struggles with hash rate reductions.