Robinhood Crypto, the digital currency trading platform owned by Robinhood Markets, has been fined $30m by the New York Department of Financial Services (DFS).
The fine was issued for violating anti-money laundering and cybersecurity regulations the regulator said.
In outlining the charges against the platform, DFS superintendent Adrienne Harris said: “As its business grew, 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.”
The regulator explained that all virtual currency companies that are registered in New York State are held to the same standards for consumer protection, cybersecurity and AML.
The watchdog continued by arguing that these regulations are critical to ensuring that consumers are protected and that platforms do not become complicit with criminal groups.
Specifically, Robinhood is said to have violated the DFS Virtual Currency Regulation, Money Transmitter Regulation, Transaction Monitoring Regulation and the Cybersecurity Regulation.
According to the ruling, the company committed breaches because it did not properly predict the number of staff members it would need to complete these requirements, calling the number “inadequate”.
This ruling hits even harder after Robinhood had to cut 23% of its staff earlier this week, a second big cut for the company’s staff in 2022 alone with more possibly coming later.
Robinhood did confirm that this investigation was ongoing back in July 2021 when the company went public on NASDAQ and listed under the “HOOD” stock ticker.
Robinhood suggested at the time that it would need $10m to settle with the DFS but this figure was underestimated. The fact that the company has to now pay triple this amount and its 44% crash in terms of revenue adds considerable pressure to the trading and cryptocurrency giant.
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