According to Coinbase's email, "Coinbase has taken substantial measures to address [the] historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance."
Crypto exchange Coinbase has agreed to pay a $50M penalty to New York regulators. Coinbase will invest another $50M in its compliance program over the next two years.
In 2020, the New York State Department of Financial Services (NYDFS) detected issues with the exchange’s 2018-2019 compliance program. This included shortcomings in Coinbase’s Anti-Money Laundering (AML) policy and user onboarding process.
In the consent order dated January 4, 2023, the regulators alleged that Coinbase’s compliance-related issues increased as it experienced “dramatic” growth in 2021. In the words of Superintendent of Financial Services, Adrienne A. Harris,
“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth."
The NYDFS also claimed that Coinbase failed to monitor suspicious transactions. According to the regulators, Coinbase had amassed a backlog of over 100K alerts about suspicious transactions.
In response, Coinbase has agreed to a $100M settlement with the NYDFS. The exchange will pay the $50M fine within ten days via wire transfer. Coinbase is also required to report how the firm intends to spend the $50M compliance investment funds within two months to the New York regulators.
Furthermore, Coinbase will continue to work with its independent monitor for another year. NYDFS added that the fees paid to the monitor may be counted as part of the compliance investment.
Coinbase shares have surged by 14% following the announcement.
