The New York State Department of Financial Services (NYDFS) has reached an agreement with cryptocurrency exchange Coinbase, after investigating the cryptocurrency exchange's compliance program, on a $100 million settlement.
Regulators reported that cryptocurrency exchange Coinbase had a total of up to 100,000 alerts about potentially suspicious customer transactions, Cointelegraph reported.
In an announcement on Wednesday, the New York State Department of Financial Services said cryptocurrency exchange Coinbase will pay a $50 million fine in response to violations of New York's financial services and banking laws, as well as a $50 million investment to patch its compliance program.
According to the financial regulator, cryptocurrency exchange Coinbase had several shortcomings related to anti-money laundering (AML) requirements. The New York State Department of Financial Services also reported issues with Coinbase's process for onboarding new users and monitoring transactions.
Where the ministry said: (Coinbase) acknowledged to the administration its failures in this regard. Furthermore, some of these issues have been known to Coinbase since at least 2018, and were flagged through internal evaluations and external reviews, including checks conducted by the department.
She added: Although (Coinbase) worked to correct these problems, its progress was slow: progress in certain areas did not happen until recently, and work is still pending until the present time.
New York regulators also reported that Coinbase allowed customers to open accounts without adequate checks — a violation of anti-money laundering requirements under the state's licensing system.
According to the regulator, the growth in the number of users on the cryptocurrency exchange contributed to the failure to keep up with monitoring of suspicious transactions, noting that more than 100,000 alerts were received.
Paul Grewal, Coinbase's chief legal officer, said: We're proud of our commitment to compliance, but we're also willing to admit where we fail, including paying fines and working hard to fix problems.
