Robinhood’s cryptocurrency division has been fined $30 million by the New York Division of Monetary Companies over alleged anti-money laundering and cybersecurity violations (by way of The Wall Road Journal). This marks the state’s first enforcement motion associated to cryptocurrency.
The settlement resolves the investigation opened by the NYDFS final March, which Robinhood disclosed in a submitting with the Securities and Trade Fee earlier than the corporate went public. Whereas Robinhood initially estimated that the NYDFS would positive the corporate as much as $15 million, it later amended its submitting to replicate an estimated $30 million charge.
Based on the NYDFS, Robinhood Crypto’s cybersecurity program had “essential failures” that “didn’t absolutely deal with” the corporate’s operational dangers. The NYDFS additionally alleges that Robinhood’s crypto arm had “vital deficiencies” in its anti-money laundering compliance program and that it violated client safety legal guidelines by not having a cellphone quantity on its web site devoted to fielding buyer complaints.
“As its enterprise grew, Robinhood Crypto failed to speculate the right sources and a spotlight to develop and preserve a tradition of compliance — a failure that resulted in vital violations of the Division’s anti-money laundering and cybersecurity rules,” Adrienne Harris, the superintendent of NYDFS, stated in a press release.
“We’re happy the settlement in precept reached final 12 months and beforehand disclosed in our public filings is now closing,” stated Cheryl Crumpton, Robinhood’s affiliate common counsel of litigation and regulatory enforcement. “We’ve made vital progress constructing industry-leading authorized, compliance, and cybersecurity packages, and can proceed to prioritize this work to greatest serve our clients.”
In 2020, the SEC charged Robinhood $65 million for allegedly deceptive clients about the way it makes cash. Final June, the Monetary Trade Regulatory Authority (FINRA) fined Robinhood practically $70 million to settle claims over its failure to guard clients on the buying and selling platform. Across the similar time, the US Division of Justice seized Robinhood CEO Vlad Tenev’s cellphone throughout its investigation into how Robinhood dealt with the GameStop inventory frenzy final 12 months.