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 (through The Wall Avenue 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 firm went public. Whereas Robinhood initially estimated that the NYDFS would nice the corporate as much as $15 million, it later amended its submitting to replicate an estimated $30 million charge.
In response to the NYDFS, Robinhood Crypto’s cybersecurity program had “important failures” that “didn’t absolutely handle” the corporate’s operational dangers. The NYDFS additionally alleges that Robinhood’s crypto arm had “important deficiencies” in its anti-money laundering compliance program and that it violated shopper 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 take a position the right assets and a focus to develop and keep a tradition of compliance — a failure that resulted in important 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 remaining,” stated Cheryl Crumpton, Robinhood’s affiliate basic counsel of litigation and regulatory enforcement. “We’ve got made important progress constructing industry-leading authorized, compliance, and cybersecurity applications, and can proceed to prioritize this work to finest serve our prospects.”
In 2020, the SEC charged Robinhood $65 million for allegedly deceptive prospects about the way it makes cash. Final June, the Monetary Business Regulatory Authority (FINRA) fined Robinhood practically $70 million to settle claims over its failure to guard prospects on the buying and selling platform. Across the identical 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.