- Coinbase has agreed to pay $50 million to the New York State Department of Financial Services.
- The fine stems from a potential violation of AML laws by Coinbase due to improper background checks.
- The settlement will require the crypto exchange to invest another $50 million to improve its compliance program.
- The company’s share price has gone up more than 13% since the news of the settlement came out.
Coinbase has reached a settlement with the New York State Department of Financial Services (NYDFS) over charges related to improper background checks during the opening of new accounts. The American crypto exchange will pay a $50 million fine to the New York regulator to settle the charges.
Coinbase will invest $50 million to improve compliance
According to a press release from the NYDFS, Coinbase’s compliance program had significant failures which led to the violation of NY Banking Law and the NYDFS’s transaction monitoring and cybersecurity regulations among other things. These violations exposed the crypto platform to serious criminal conduct including fraud, possible money laundering, and potential narcotics trafficking.
“It is critical that all financial institutions safeguard their systems from bad actors, and the Department’s expectations with respect to consumer protection, cybersecurity, and anti-money laundering programs are just as stringent for cryptocurrency companies as they are for traditional financial services institutions,”NYDFS Superintendent Adrienne A. Harris
As part of the settlement, Coinbase will be required to pour in an additional $50 million in its compliance program over the next two years. This investment will go towards ensuring that the platform’s compliance procedures are in line with the NYDFS’s standards, in addition to addressing the present concerns.
Paul Grewal, the Chief Legal Officer at Coinbase, acknowledged the settlement on Twitter earlier today. “We’re proud of our commitment to compliance, but we are also willing to acknowledge where we have fallen short” Grewal tweeted.
The settlement has sent Coinbase’s share price soaring. At the time of writing, the stock was trading at $38.18, up more than 13% since market open.