Coinbase, a cryptocurrency trading exchange that is publicly traded and located in the United States, has agreed to pay a fine of $50 million to the New York State Department of Financial Services. This comes after the exchange was found to allow users to register accounts without doing necessary background checks, in violation of anti-money laundering regulations.

Coinbase Fined For $100 Mn

In addition to this, the U.S. crypto exchange also needs to invest $50 million to strengthen its compliance program, which is intended to deter drug dealers, child pornographers, and other potential lawbreakers from opening accounts. Coinbase will be required to comply with the terms of the settlement with the New York State Department of Financial Services, which was announced on Wednesday.

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The compliance issues at Coinbase were discovered for the first time in 2020 during a customary assessment, which took place after the exchange had successfully obtained an operating license in the state of New York in 2017. The authorities discovered issues with the anti-money laundering measures of the exchange that dated all the way back to 2018.

Coinbase’s Compliance Issues

Coinbase initially consented to engage the services of an outside consultant in order to assist it in reorganizing its day-to-day operations in order to fulfill the requirements imposed by anti-money laundering laws; which stipulate that the company must know the identities of its customers and keep track of their activities to look for any suspicious activity. However, that did not resolve the issues plaguing the corporation, and in 2021, officials initiated a more formal investigation.

Adrienne A. Harris, New York State’s superintendent of financial services, claimed that Coinbase’s compliance department had failed to keep up with the firm’s rapid growth & was quoted as saying:

We found failures that really warranted putting in place an independent monitor rather than wait for a settlement. It is why our framework holds crypto companies to the same standard as for banks.

The once-booming industry of trading cryptocurrencies around the world has taken another blow. Several cryptocurrency companies have declared bankruptcy in the previous 12 months, the most prominent of which being FTX, the world’s second-largest crypto exchange before it shut down in November. The founder, Sam Bankman-Fried, along with several other high-ranking FTX employees, is now being charged with federal crimes.

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Pratik has been a crypto evangelist since 2016 & been through almost all that crypto has to offer. Be it the ICO boom, bear markets of 2018, Bitcoin halving to till now – he has seen it all.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.