Coinbase strikes a $100m settlement with New York DFS

Cryptocurrency, Coinbase

The New York Department of Financial Services (DFS) and U.S.-based cryptocurrency exchange Coinbase have struck a $100 million settlement, the exchange and the regulator said on Wednesday.

The regulator’s investigation into the company’s adherence to rules intended to prevent money laundering is concluded with the settlement, which carries a $50 million fine.

Coinbase was found to have performed insufficient background checks and to have handled its user onboarding procedures as a “simple check-the-box,” according to the regulator.

“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,” said New York DFS Superintendent Adrienne Harris.

According to Paul Grewal, Coinbase’s chief legal officer, the exchange has rectified the issues.

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The company’s compliance programme in the years 2018 and 2019 as well as the compliance backlogs as the exchange grew in 2021 were the main focus of the investigation, according to a blog post by Coinbase.

“We took NYDFS’s concerns seriously and have taken substantial measures to address these historical shortcomings,” the blog post said.

One of the biggest cryptocurrency exchanges in the world and a publicly listed business, Coinbase, will pay an additional $50 million to step up compliance operations targeted at preventing prospective criminals from accessing the exchange, the company said. Coinbase must collaborate with a third-party monitor as part of the agreement.