U.S. cryptocurrency exchange Coinbase has been fined $50m (£41m) by regulators for repeated failures to fight money laundering.
The outages left the exchange “vulnerable to serious criminal behavior, including… fraud, possible money laundering, alleged child sexual abuse, and possible drug trafficking,” said the regulator, the New York State Department of Financial Services (NYSDFS). . . ).
Coinbase, once the second largest cryptocurrency exchange in the world, debuted on the US stock exchange in April 2021. Now he needs to spend another $50 million over the next two years to improve his compliance services because he didn’t do enough background checks. found the controller.
It received a license from the NYSDFS to allow clients to trade cryptocurrencies on its platform in 2017, but the ministry has since said it found compliance measures inadequate for an exchange of its size.
“It is critical that all financial institutions protect their systems from intruders, and regulatory expectations for consumer protection, cybersecurity and anti-money laundering programs are just as stringent for crypto companies as they are for traditional financial services companies,” Adrienne . Harris, NYSDFS superintendent, said.
“Coinbase has failed to build and maintain a working compliance program that has kept up with the pace of growth. This flaw exposed the Coinbase platform to potential criminal activity,” she added.
The company acknowledged its failure, stating, “We listened to the concerns of the NYSDFS and took significant action to address these historic shortcomings.”
The fine was another blow to the credibility of the crypto industry, which is experiencing the collapse of the FTX crypto exchange, the Three Arrows Capital hedge fund and other corporations.
This follows an unprecedented joint statement on cryptocurrencies by three major U.S. federal regulators.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have said U.S. banks should be more cautious about fraud risks, legal uncertainty, and misleading disclosures from crypto firms. They added that they were concerned about the safety and soundness of banking business models that rely heavily on cryptocurrencies.
The Federal Reserve, FDIC, and OCC have highlighted the risks associated with crypto, including volatility in digital asset markets, industry contagion risk, and weak risk management.
Banks that issue or hold crypto tokens held on public decentralized networks are “likely” to violate safe and sound banking practices, regulators added, potentially hitting various lenders’ ongoing efforts to offer services to customers.
The announcement comes after regulators hesitated for months to release uniform guidelines or rules for cryptocurrencies, though banks have expressed a desire for more clarity.
The joint statement said that regulators are monitoring banks that may be exposed to risks associated with cryptocurrencies and are considering proposals by banks to conduct cryptocurrencies.
“It is important that the risks associated with the crypto-asset sector, which cannot be mitigated or controlled, do not migrate into the banking system,” regulators said.
Source: I News
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