According to reports, cryptocurrency exchange Gemini told consumers that their money in its interest-bearing Earn product were secure since they were covered by the Federal Deposit Insurance Corp. (FDIC).
According to reports, the exchange purports that consumers didn't seem to grasp that Gemini's interactions with customers about the FDIC seemed to be in regard to the company's deposits at other banks rather than its own products.
Financial companies are not allowed to indicate that a product is FDIC-insured when it is not.
Gemini is being looked at by the New York Department of Financial Services (NYDFS).
In November of last year, the exchange stopped accepting withdrawals from its Earn product due to the effects of the demise of another exchange, FTX.
The platform is thought to have about $900 million frozen as a result. The suspension was attributed to a similar freeze at the now-defunct cryptocurrency lender Genesis, where Gemini had allegedly illicitly invested its clients' money. Digital Currency Group, a crypto corporation, owns both Genesis and CoinDesk.