Why NYDFS Fines Robinhood Crypto For $30M

The New York Department of Financial Services (NYDFS) fines Robinhood Crypto for $30m. The regulator posted a press release on 2 August regarding multiple violations by Robinhood.

Multiple Violations by Robinhood

In the press release on the NYDFS website, they stated several violations by Robinhood. The crypto company will have to pay $30m for failures in the bank secrecy act/anti-money laundering obligations and cybersecurity that resulted in violations of the Virtual Currency Regulation, Money Transmitter Regulation, Transaction Monitoring Regulation, and Cybersecurity Regulation. In addition to the penalty, Robinhood needs to hire an independent consultant that helps evaluate its compliance and remediation efforts.

Superintendent Harris stated, “Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations.”

In the press release, NYDFS mentioned that Robinhood was “inadequately staffed” as the company was still using a manual transaction monitoring system while its consumers grew. NYDFS also found failures in the cybersecurity program as Robinhood did not fully address the operational risks, and some policies were not in compliance with the regulations.

NYDFS added Robinhood failed to give consumer protection as they did not provide a dedicated phone number on the official website for consumers to drop complaints. 

Previously on Robinhood Situation

Last year, US FINRA also fined Robinhood a total of $70m to the regulatory body and some consumers. FINRA said the company caused harm for consumers in the community.

The news can be an evaluation for companies in the industry to follow and update with the regulations.

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