Coinbase Reach $100 Mln Settlement With NYDFS

(RTTNews) - Crypto-trading platform Coinbase has reached a $100 million settlement with New York Department of Financial Services after the regulator found "significant failures" to comply with the state's anti-money-laundering laws.

Coinbase will pay a $50 million penalty to New York State for failures in its compliance program that violated the New York Banking Law and the New York State Department of Financial Services' virtual currency, money transmitter, transaction monitoring, and cybersecurity regulations.

According to the regulator, the failure to comply with laws has made the platform "vulnerable to serious criminal conduct, including fraud, possible money laundering, suspected child sexual abuse material-related activity, and potential narcotics trafficking."

Coinbase will also invest $50 million in its compliance function over the next two years to remediate the issues and to enhance its compliance program pursuant to a plan approved by DFS.

"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," said Superintendent Adrienne Harris. "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 requiring the Department to take immediate action including the installation of an Independent Monitor."

"We took NYDFS's concerns seriously and have taken substantial measures to address these historical shortcomings," the company said in a blog.