Coinbase reaches $100m settlement with New York financial regulator


Crypto exchange Coinbase has reached a $100m settlement with the New York Department of Financial Services over compliance program issues.

According to Decrypt, Coinbase will pay a $50m fine and will also invest $50m into bolstering its compliance programs.

The company will invest the $50m to bolster its abilities to comply with financial regulations, such as transaction monitoring and KYC rules.

The New York department said it found ‘significant failures’ in Coinbase’s compliance program that violated New York Banking Law and state regulations regarding virtual currencies, cybersecurity, money transmitting and transaction monitoring.

The NYDFS noted that the flaws in Coinbase’s compliance program made the firm vulnerable to criminal conduct such as fraud, money laundering and activity related to child sexual abuse material and narcotics trafficking.

Superintendent of Financial Services Adrienne A. Harris said, “It is critical that all financial institutions safeguard their systems from bad actors. Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.”

New York regulators found that the manner which the firm abided by KYC and  CDD requirements were treated as a “simple check-the-box exercise” that was inadequate.

The department found that Coinbase had a substantial backlog in its system for monitoring suspicious transactions that totaled over 100,000 unreviewed alerts by late 2021. As a result, some transactions flagged by Coinbase weren’t reviewed until months after they took place.

The regulator noted that Coinbase has begun to address many of the issues found with its compliance program and is working to revise it practices.

Copyright © 2023 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.