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 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 Change Fee earlier than the firm went public. Whereas Robinhood initially estimated that the NYDFS would high quality the corporate as much as $15 million, it later amended its submitting to replicate an estimated $30 million price.
In response to the NYDFS, Robinhood Crypto’s cybersecurity program had “essential failures” that “didn’t totally 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 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 correct sources and a spotlight to develop and preserve 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 an announcement.
“We’re happy the settlement in precept reached final yr and beforehand disclosed in our public filings is now last,” stated Cheryl Crumpton, Robinhood’s affiliate normal counsel of litigation and regulatory enforcement. “We now have made important progress constructing industry-leading authorized, compliance, and cybersecurity applications, 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 almost $70 million to settle claims over its failure to guard clients 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 yr.