• Coinbase has reached an agreement with the New York Department of Financial Services to pay a $50 million fine and invest an additional $50 million in its compliance program.
• This settlement is due to Coinbase allowing bad actors to use its platform to launder money.
• The financial regulator determined that Coinbase had issues with their anti-money laundering controls dating back to 2018.
Coinbase, the leading cryptocurrency exchange, has reached an agreement with the New York Department of Financial Services (NYDFS) to improve its compliance program and pay a $50 million fine. This settlement comes after a long investigation by the financial regulator, which found that Coinbase had allowed bad actors to use its platform to launder money. The holes in their compliance mechanisms were first detected in 2020, but issues with their anti-money laundering controls dated back as far as 2018.
As part of the agreement, Coinbase will pay the $50 million fine, as well as invest an additional $50 million into their compliance program. This is due to the financial regulator wanting the crypto exchange to meet the same standards as U.S. banks when it comes to preventing money laundering and other illicit activities. Adrienne Harris, Superintendent of Financial Services for the state of New York, said: “We found failures that really warranted putting in place an independent monitor rather than wait for a settlement. We have been very outspoken about illicit financing concerns in the space. It is why our framework holds crypto companies to the same standard as for banks.”
To ensure that Coinbase meets the same standards as U.S. banks, the company has established an in-house system to keep track of suspicious activity. The NYDFS has also ordered Coinbase to hire an independent firm to review the company’s compliance program and make sure it is up to date. The crypto exchange has been under investigation since 2021, but the regulator believes that remedying the issues now is better than waiting for a settlement.
The financial regulator’s investigation and settlement with Coinbase serves as a reminder that crypto exchanges need to have strong anti-money laundering controls in place if they want to operate in the U.S. It is also a sign that the NYDFS is taking a hard stance against cryptocurrency companies that fail to meet its standards. By investing in its compliance program, Coinbase is showing its commitment to staying compliant and preventing money laundering on its platform.