Coinbase to pay $100M in settlement with New York regulators
NEW YORK New York announced a $100million settlement with Coinbase Wednesday over what state officials described as significant failures in the platform’s systems for spotting criminal activity.
According to the state Department of Financial Services, Coinbase’s anti-money-laundering program and its system for monitoring transactions for suspicious activity were inadequate for a company of Coinbase’s size and complexity. According to the department, Coinbase’s transaction monitoring system generated so many alerts that reports of suspicious activity could be filed months after the first suspicious activity was discovered by Coinbase.
“It’s critical that all financial institutions protect their systems from bad actors. The Department’s expectations regarding consumer protection, cybersecurity and anti-money laundering programs for cryptocurrency companies are as strict as those for traditional financial institutions,” Adrienne A. Harris, Financial Services Superintendent, stated in a press release. “Coinbase failed in its obligation to maintain a functional compliance program that could keep up with its growth.” “
Coinbase will pay a $50million penalty to New York State and will invest another $50million in its compliance program. To ensure compliance, Coinbase will have a one-year-long independent monitor from the state.
Paul Grewal, Coinbase’s chief legal officer, said in a statement that the company has taken substantial measures to address the shortcomings identified by the New York investigation “and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance.”
Grewal added, “We believe our investment in compliance outpaces every other crypto exchange anywhere in the world, and that our customers can feel safe and protected while using our platforms.”
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