Unbanked, Inc. Ordered to Halt Crypto Scam, Washington D.C., 2023

WASHINGTON D.C. – The Federal Deposit Insurance Corporation (FDIC) isn’t playing games. Today, the agency slapped Unbanked, Inc., a non-bank company based in Alpharetta, Georgia, with a cease and desist order, accusing the firm of peddling blatant lies about FDIC insurance to lure in crypto investors. The agency alleges Unbanked, along with certain company officers, made false and misleading statements regarding the insurance status of its crypto-related products and services.

The FDIC claims Unbanked actively represented a banking relationship with two FDIC-insured banks, then twisted that connection to falsely imply its crypto accounts were themselves FDIC-insured. Promotional materials, website copy, and social media posts allegedly made the claim without *any* disclaimer that cryptocurrency – a notoriously volatile asset – is not covered by federal deposit insurance. This isn’t a simple misunderstanding; it’s a calculated attempt to exploit the FDIC’s reputation for trust and security to boost a risky venture.

According to the FDIC, Unbanked’s statements created the impression that (1) FDIC insurance applies to cryptocurrency, and (2) that insurance would shield investors from losses stemming from the inherent risks of the crypto market. Let’s be clear: FDIC insurance doesn’t cover your Bitcoin losses if the market crashes, and it never has. The FDIC only insures deposits held at insured financial institutions, protecting against the failure of *those* institutions, not the fluctuating value of digital assets.

The Federal Deposit Insurance Act (FDI Act) has strict rules about representing FDIC insurance. The law prohibits anyone from implying an uninsured product is insured, or from knowingly misrepresenting the extent of that insurance. The FDI Act also bars companies from using “FDIC” in their name or advertising to create a false sense of security. Unbanked, Inc. appears to have violated all of the above.

The FDIC’s letter to Unbanked demands immediate correction of these misleading statements. While the agency hasn’t announced any criminal referrals at this time, the cease and desist order is a strong signal that they’re taking this matter seriously. This isn’t just about protecting the FDIC’s brand; it’s about safeguarding consumers from predatory financial schemes disguised as legitimate investment opportunities.

Grimy Times will continue to follow this case. The full FDIC letter to Unbanked, Inc. is available for review [link to FDIC document]. Contact Brian Sullivan at the FDIC (202-412-1436) for further inquiries. Last updated August 4, 2023.