Coinbase to pay $100M in settlement with New York regulators

Coinbase to pay $100M in settlement with New York regulators

NEW YORK — New York announced Wednesday a $100 million settlement to Coinbase over state officials’ concerns about Coinbase’s systems for detecting criminal activity.

According to the state Department of Financial Services, Coinbase’s anti-money-laundering program and its system for monitoring transactions for suspicious activity were inadequate for a company of Coinbase’s size and complexity. According to the department, Coinbase’s transaction monitoring system generated so many alerts that reports of suspicious activity could be filed months later than the first time the suspicious activity was discovered by Coinbase.

Adrienne A. Harris, Financial Services Superintendent, stated in a press release that “it is crucial that all financial institutions safeguard the systems from bad actors” and that the Department’s expectations regarding consumer protection, cybersecurity and anti-money laundering programs are as strict for cryptocurrency companies than they are for traditional financial service institutions. “Coinbase failed in its ability to create and maintain a functional compliance system that could keep up with its growth.”

The settlement stipulates that Coinbase will pay $50 million to New York State and invest $50 million more in its compliance program. Coinbase will be monitored by an independent monitor for one year by the state to ensure compliance.

Paul Grewal, Coinbase’s chief legal officer, stated in a statement that the company had taken substantial steps to correct the New York deficiencies and “remains committed to being a leader in the crypto space and to partnering with regulators when they come to compliance.”

Grewal said, “We believe that our investment in compliance exceeds any other crypto exchange anywhere on the planet, and that our customers are able to feel safe and protected while using these platforms.”

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