The crypto trading unit for Robinhood has been fined $30 million by the New York State Department of Financial Services (DFS) in a landmark case for the regulator.
The multi-million dollar fine comes for violations of anti-money-laundering and cybersecurity regulations; the first such action that the DFS has brought against a crypto-related company.
AML Violations
According to a statement issued by the Department of Financial Services Robinhood received a hefty penalty for “significant failures” pertaining to the bank secrecy act and anti-money laundering legislation.
The fine itself comes as no surprise to Robinhood. The online brokerage had publicly disclosed that they expected to receive some sort of penalty from the regulator as early as this time last year. However, while Robinhood had initially expected the fine to be something in the region of around $10 million, that figure later increased threefold.
As part of the settlement, Robinhood will now be required to retain “an independent consultant” to ensure that further lapses in compliance do not occur.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” said Superintendent Adrienne A. Harris in a statement released on Tuesday. “All virtual currency companies licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services companies.”
Superintendent Harris went on to warn that the case may not be the last of its kind.
“DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions,” she added.
Fairer regulation
While Harris has taken decisive action against Robinhood for its failures, the DFS Superintendent has made it clear that legal action should be a last resort. Speaking to the Wall Street Journal in June she said, “We should have transparency about what the rules of the road are,” steering away from “regulation by enforcement,” where safe practices only become clear through legal action.
As part of its commitment to transparency, the DFS issued guidance on stablecoins earlier this year.
What do you think about this subject? Write to us and tell us!
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
