Cryptocurrency exchange Coinbase reached an agreement to pay a $50 million penalty to New York state’s Department of Financial Services to settle accusations that it enabled customers to open accounts without conducting necessary background checks.
The regulator stated that Coinbase violated the New York Banking Law and the New York State Department of Financial Services (DFS) virtual currency, money transmitter, transaction monitoring, and cybersecurity regulations.
As per the settlement, the crypto exchange is also required to invest $50 million into its compliance program over the next two years.
The $100 Settlement
In a statement, Superintendent of Financial Services Adrienne A. Harris said the compliance failures exposed the platform to serious criminal conduct, such as fraud, possible money laundering, suspected child sexual abuse material-related activity, and potential narcotics trafficking, among others.
“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity requiring the Department to take immediate action including the installation of an Independent Monitor.”
Read more: cryptopotato.com