The crypto division of the popular trading app Robinhood has been slapped with a $30 million fine in New York after the company allegedly violated cybersecurity regulations and anti-money laundering laws. The penalty was handed down by the New York State Department of Financial Services, which accused the company of failing to utilize proper resources to halt illicit trading activity on its platform.
Robinhood Has Landed in Hot Water
A press release involving the matter said that Robinhood was using transaction monitoring protocols that bore “significant deficiencies.” The company is now being investigated further. The press release went on to say:
All of these deficiencies resulted from what the department found were significant shortcomings in the management and oversight of RHC’s compliance programs, including a failure to foster and maintain an adequate culture of compliance. The department also discovered that adequate resources were not devoted to RHC’s compliance programs, particularly as it grew, which exacerbated these issues.
In addition to poor marks in the anti-money laundering department, Robinhood is also being accused of failing to hire and train its staff to prevent illicit financial behavior. The Department of Financial Services says that Robinhood did not take note of all the trading risks that were present, and thus didn’t act with enough perseverance and strength.
Robinhood, naturally, says it has done nothing wrong, and by contrast has worked hard to ensure that all its financial compliance measures were strong and workable. Chery Crumpton – the associate general counsel for the firm – explained in an interview:
We have made significant progress building industry-leading legal, compliance, and cybersecurity programs. We will continue to prioritize this work to best serve our customers. We remain proud to offer a more accessible, lower-cost platform to buy and sell crypto and are excited to continue to grow our business in a responsible manner with new products and services that our customers want.
Robinhood has been somewhat of a controversial trading company following an incident that occurred in early 2021. During the first month of that year, crypto assets like bitcoin and Dogecoin, along with several stocks were rising at a rapid pace, meaning everyone wanted in on the action. Robinhood stepped in and halted all trades, claiming it was doing so to protect traders from a potential scam or other illicit behavior.
What Will the Company Do?
Many customers did not take well to the maneuver and initiated a class-action lawsuit against the company, claiming executives had prevented them from taking part in serious investing opportunities. Not long ago, Robinhood also announced plans to lay off as much as 23 percent of its workforce.
Along with the fine, Robinhood will now be required by the department to hire the services of an independent monetary consultant who will regularly evaluate the company’s compliance efforts and enforce remedies when necessary.
Source: https://www.livebitcoinnews.com/robinhood-crypto-division-hit-with-30-million-fine/