Topline
New York’s financial regulator has fined Robinhood’s cryptocurrency subsidiary $30 million after an investigation which the agency says found the company broke anti-money laundering and cybersecurity rules, the latest massive penalty facing the online brokerage.
Robinhood’s logo dis isplayed on a phone screen and representation of cryptocurrencies are seen in … [+]
Key Facts
Robinhood agreed to a settlement with the New York Department of Financial Services under which it will also be required to hire an independent compliance consultant.
The probe found “significant shortcomings” in the compliance program of Robinhood Crypto, where users can buy and sell cryptocurrency, the regulator said.
Robinhood Crypto failed to monitor transactions adequately, didn’t properly staff its anti-money laundering compliance unit, and didn’t comply with state cybersecurity guidelines, authorities said.
It’s the latest penalty against Robinhood: the Securities and Exchange Commission fined the firm $65 million in December 2020 and the Financial Industry Regulatory Authority fined the company $70 million in June 2021, both for several violations mostly tied to misleading customers.
Robinhood is “pleased” the penalty is finalized, Cheryl Crumpton, the company’s associate general counsel of litigation and regulatory enforcement, said in a statement provided to Forbes, asserting that it has made “significant progress” in building out its legal, compliance and cybersecurity teams.
Key Background
The fine matches the $30 million Robinhood said it expected to pay as a result of the probe in regulatory filings last month. This was the first cryptocurrency penalty levied by New York’s financial regulator, according to the Wall Street Journal, following a slew of other crackdowns in the industry. Robinhood’s stock price is down nearly 75% since going public last July. A 20-year-old Robinhood consumer tragically died by suicide in 2020 after seeing an incorrect negative balance of over $700,000 on the platform, and his death was cited by the Financial Industry Regulatory Authority in its fine against Robinhood.
Further Reading
Robinhood Fined $70 Million For ‘Significant Harm’ To Customers Ahead Of IPO (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/08/02/robinhoods-crypto-arm-hit-with-30-million-fine-by-state-regulator/