Coinbase: $100m Fine to New York State Regulators for Longstanding Compliance Failures

AltFi | Amelia Isaacs | Jan 5, 2023

Coinbase - Coinbase: $100m Fine to New York State Regulators for Longstanding Compliance Failures

Image: Coinbase

The crypto exchange will pay a $50m fine and invest $50m (over the next 2 years) in its AML programme, which had “wide-ranging and longstanding failures”.

  • According to the regulators, the crypto firm had let customers open accounts without sufficient background checks, and its failures made the platform vulnerable to “serious criminal conduct”, including “examples of fraud, possible money laundering, suspected child sexual abuse material-related activity, and potential narcotics trafficking”.  Coinbase’s failure to keep up with its rate of growth meant that by late 2021 there was a growing backlog of more than 100,000 unreviewed transaction alerts.
    • This caused the company to routinely fail timely investigate and report suspicious activity.

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Adrienne Harris, NYS Department of Financial Services Superintendent:

It is critical that all financial institutions safeguard their systems from bad actors, and the Department’s expectations with respect to consumer protection, cybersecurity, and anti-money laundering programs are just as stringent for cryptocurrency companies as they are for traditional financial services institutions.  Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.

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