Authorities have issued a stern reminder following recent false advertising by some crypto companies: funds deposited with a crypto-based financial services provider will never be insured by the Federal Deposit Insurance Corporation (FDIC).
No crypto company is an FDIC-insured bank, and FDIC insurance doesn’t cover any crypto at all, according to the warning released by the Federal Trade Commission (FTC).
“Know that crypto deposits are not FDIC insured, period. If something happens, the government may not have an obligation to step in and help get your money back,” FTC stated.
FDIC insurance only protects deposits of up to $250,000 in FDIC-insured banks if the bank fails to meet obligations.
There are many more cases where FDIC insurance doesn’t apply, even if the assets are purchased from an insured bank. These include:
- Stock investments
- Bond investments
- Mutual funds
- Crypto Assets
- Life insurance policies
- Municipal Securities
- Safe deposit boxes or their contents
Cybernews has already reported on Voyager, a failed crypto company that deceived clients with lies about having FDIC insurance on money deposited through a “Voyager App.” People with accounts were locked out and lost money.
To fight misinformation, FDIC, an independent agency created by Congress, launched a public campaign, “Know Your Risk. Protect Your Money,” to raise awareness about deposit insurance.
“Consumers today have a variety of options for where they can put their money. Evidence suggests many people may be confused whether their funds are protected by deposit insurance,” said FDIC Chairman Martin J. Gruenberg. “In light of concerns raised by the bank failures earlier this year, this is an important moment for the FDIC to reach out to the public and ensure that more consumers understand deposit insurance and how it protects their money.”
After three regional bank failures earlier this year, nearly half of Americans are worried about the safety of their money deposited into banks and other financial institutions, a Gallup poll indicated.
However, no depositor has lost a penny of their insured deposits since the FDIC’s creation 90 years ago. And 99% of deposit accounts qualify for complete protection as they’re under the $250,000 insurance coverage limit.
Deposit Insurance automatically covers traditional deposit accounts, such as:
- Checking accounts
- Savings accounts
- Money market deposit accounts (MMDAs)
- Certificates of deposit (CDs)
To determine if your institution is FDIC-insured, you can use FDIC’s BankFind tool.
To protect yourself from crypto-related scams, don’t trust companies that make big promises or guarantees.
“Only scammers promise “no risk,” guarantee high returns, or promise “safe” places to deposit your money,” FTC warns.
The value of your non-deposit investments can go up or down depending on the demand for them in the market, so you could lose the money you invested or not gain as much profit as you expected.
To see what people are saying about a crypto or other company, you could research them by searching online for the company name plus “review,” “scam,” or “complaint.” Spot a crypto fraud or scam? Report it at ReportFraud.ftc.gov.
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