Hold on a moment, Crypto firms claiming FDIC protection? Think twice
Author: Federal Trade Commission
Have you come across crypto firms boasting about FDIC insurance? Well, slow down a bit. The Federal Deposit Insurance Corporation (FDIC) protects your deposits in traditional banks up to $250,000 if the bank fails. However, when it comes to the funds you place with a cryptocurrency-based financial service provider, that's a different story. Unfortunately, these funds are neither FDIC-insured nor safeguarded if the crypto company faces financial difficulties. Nevertheless, one cryptocurrency company boldly made such a promise.
The Federal Trade Commission (FTC) has disclosed that Voyager Digital LLC, a cryptocurrency-based financial service provider, deceived individuals by asserting that money deposited through their "Voyager App" was FDIC-insured in case of any mishap. Voyager marketed itself as a secure and reliable alternative to traditional banks for storing money, encouraging people to forsake their conventional banks and opt for Voyager's debit card.
Despite their claims, Voyager was never an FDIC-insured bank, and it's important to note that FDIC insurance doesn't extend to cryptocurrencies, also referred to as crypto assets. Consequently, when Voyager eventually went under and declared bankruptcy, individuals holding accounts found themselves locked out and suffered financial losses.
In a settlement proposal revealed recently, Voyager and its associated companies have consented to a permanent prohibition on offering, promoting, or marketing any products or services designed for depositing, exchanging, investing, or withdrawing assets.
To safeguard yourself from crypto-related scams
- Recognize that crypto deposits lack FDIC insurance, plain and simple. In case of issues, the government might not have an obligation to intervene and assist in retrieving your funds.
- Conduct thorough research on the cryptocurrency company. Search online for the company's name along with keywords like "review," "scam," or "complaint" to gauge public sentiment.
- Exercise caution when dealing with firms that make grand promises or guarantees. Only scammers make assurances of "no risk," pledge excessive returns, or claim to provide "secure" locations for depositing your funds.
Visit ftc.gov/cryptocurrency for more information on cryptocurrency matters. If you encounter a cryptocurrency fraud or scam, report it to us at ReportFraud.ftc.gov.
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