Coinbase will be fined $100 million in New York
Coinbase will pay $100 million for letting users open accounts without government approval.
After Coinbase received a New York business licence in 2017, a standard check in 2020 revealed compliance issues.
A $100 million punishment will be paid by the American cryptocurrency
exchange Coinbase for allowing users to open accounts without being checked by authorities.
United States-based publicly traded bitcoin exchange Coinbase has agreed to pay the New York State Department of Financial Services a $50 million fine. This follows the discovery that the exchange violated anti-money laundering laws by allowing users to register accounts without conducting the required background checks.
Coinbase Was Fined $100 Million
To bolster its compliance procedures, which is designed to prevent drug dealers, child pornographers, and other possible lawbreakers from opening accounts, the U.S. crypto exchange must also invest an additional $50 million. The terms of the Wednesday-announced settlement with the New York State Department of Financial Services must be followed by Coinbase.
The Coinbase compliance problems were first identified in 2020 during a routine examination, which was conducted after the exchange had been successful in obtaining a business licence in the state of New York in 2017. The authorities found problems with the exchange's anti-money laundering policies dating all the way back to 2018.
Issues with Compliance at Coinbase
In order to comply with the requirements imposed by anti-money laundering laws, which state that the company must know the identities of its customers and keep track of their activities to look for any suspicious activity, Coinbase initially agreed to engage the services of an outside consultant to help it reorganise its daily operations. That did not, however, remedy the problems the firm was having, so in 2021, authorities opened a more formal investigation.
The superintendent of financial services for New York State, Adrienne A. Harris, asserted that Coinbase's compliance department had fallen behind due to the company's quick expansion and was reported as saying: We discovered failures that actually called for the appointment of an impartial monitor rather than waiting for a resolution. Because of this, our framework holds cryptocurrency startups to the same requirements as banks.
The once-booming global cryptocurrency trading market has suffered yet another setback. In the past 12 months, a number of bitcoin businesses filed for bankruptcy, the most notable of which being FTX, the second-largest cryptocurrency exchange before it closed in November. Several additional senior FTX workers, including the founder Sam Bankman-Fried, are currently facing federal charges.
