The Georgia-based technology company Unbanked, Inc. has been targeted by the Federal Deposit Insurance Corporation (FDIC) for allegedly making false and deceptive statements about its insurance status. Unbanked, a company offering crypto debit card services, faced allegations of falsely implying FDIC insurance coverage. The FDIC pursues businesses making such claims.
The FDIC emphasized Unbanked’s promotion of FDIC insurance on its website. This included material on checking accounts and crypto asset trading. Although these crypto assets were not FDIC insured or guaranteed, the corporation neglected to add a disclaimer to that effect.
Surprisingly, Unbanked was unaware of the FDIC’s cease and desist notice at first. The FDIC posted the alert on its mailing list. Decrypt’s inquiry informed the company about it.
Unbanked publicly announced in June that it will be ceasing operations and advised its users to remove their assets from the site. The business disclosed that its decision to shut down operations was a result of a $5 million investment that never materialized.
Unbanked expressed confidence in eventually getting the money and said that if it did, it would resume operations and look into alternate funding sources. The corporation cited a difficult regulatory climate in the United States as another reason for ending operations.
It requested the immediate removal of claims implying FDIC insurance coverage for crypto assets. This came after they discovered social media posts by Unbanked suggesting FDIC insurance coverage.
FDIC Vigilance: Addressing False Claims and Ensuring Market Security
Its representative emphasized in response to Decrypt’s query that a company’s intention to wind down operations does not imply that its operations have already ended. The representative made it clear that any additional concerns would have to be brought up with the FDIC general counsel.
It requests Unbanked to refrain from making false assertions. The company has 15 days to indicate written compliance with the cease and desist order.
The Unbanked dashboard (and all white-label dashboards) will be going offline on the 25th of June, 2023.
Please act now to ensure you have withdrawn all of your crypto and fiat from your account before this date. pic.twitter.com/tRbYg4HfCn
— Unbanked (@UnbankedHQ) June 19, 2023
The FDIC has already taken action against bitcoin companies for making bogus insurance claims. The agency initiated an investigation into insolvent Voyager Digital. The company had made a fraudulent claim about the insurance coverage of its assets. In truth, only Metropolitan Commercial Bank—the bank Voyager Digital did business with—had insurance.
It had previously issued a warning to the cryptocurrency exchange OKCoin about erroneous and deceptive claims made on its website and in its marketing materials.
Daniel Gouldman, a co-founder of Unbanked, informed Decrypt that even though the business has shut down, it still wants to fully abide by the FDIC’s requirements. Gouldman underlined that Unbanked had always worked to adhere to the regulations in whatever country in which they conducted business. The company offered access to partners’ FDIC-insured bank accounts. However, it never had FDIC insurance or intended to imply that it did.
The Unbanked case highlights the necessity for regulatory agencies and investors to exercise caution in the bitcoin market. The market’s expansion requires transparency, compliance, and risk management for a secure environment. These are crucial for all parties involved.
