Coinbase (COIN) will pay the New York State Department of Financial Services (NYDFS) a $50 million fine to settle allegations that it allowed users to open accounts without adequate background checks. The regulator found that the policies of the cryptocurrency exchange violated anti-money laundering laws.
The settlement also calls for Coinbase to invest $50 million over the next two years to strengthen its compliance program. “Coinbase failed to establish and maintain a functional compliance program that could keep pace with its growth,” Financial Services Director Adrienne A. Harris wrote in a release. “This failure exposed the Coinbase platform to potential criminal activity.” , asking the department to take immediate action, including installing independent monitors."
Coinbase has been licensed to operate virtual currency and remittances in New York since 2017. After NYDFS found deficiencies in Coinbase's know-your-customer (KYC) and transaction monitoring policies, the regulator installed independent monitors in early 2022 to work with Coinbase to resolve the issue. Under the terms of the agreement, the independent monitor will continue to work with Coinbase for one year, a period that can be extended at the discretion of NYDFS.
“Today, Coinbase and NYDFS have reached an agreement to incorporate the NYDFS investigation disclosed in our 2021 Annual 10K into our historical compliance program,” Paul Grewal, Coinbase’s chief legal officer, wrote in an email to CoinDesk. Coinbase has taken substantial steps to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including working with regulators on compliance."
