A fine of $30 million for Robinhoods cryptocurrency division?

8/4/2022, 05:43 AM
A fine of $30 million for Robinhoods cryptocurrency division?
As the search for scapegoats continues after the current bear market, the Robinhood platform is now facing a fine in connection with crypto trading.

The New York State Department of Financial Services (NYDFS) announced today that it has imposed a fine of $30 million on Robinhood's cryptocurrency division. The NYDFS, which is responsible for regulating financial services and products, claimed that Robinhood Crypto's anti-money laundering and cybersecurity program was understaffed and did not have enough resources to meet risks.

Robinhood Crypto was also accused of failing to transition from a manual transaction monitoring system to a system that is more appropriate for the size of its user base and transaction volume in a timely manner. The $30 million fine is the NYDFS's first enforcement action in the cryptocurrency space.

Robinhood said last year that it would pay a $30 million settlement to the NYDFS as part of an investigation focused on anti-money laundering and cybersecurity issues. The regulator claimed that Robinhood Crypto violated the law when it verified compliance with the NYDFS despite the alleged problems.

Robinhood Crypto is also said to have violated consumer protection regulations by not providing its own phone number for consumer complaints on its website. As the company grew, Robinhood Crypto failed to invest the right resources and attention necessary to develop and maintain a culture of compliance-a failure that led to significant violations of the NYDFS's anti-money laundering and cybersecurity regulations.

The fine is the latest in a series of fines imposed on Robinhood by regulatory authorities. In 2020, Robinhood paid $65 million to settle an SEC investigation into misleading customers. In 2021, the Financial Industry Regulatory Authority (FINRA) imposed a $70 million fine on Robinhood for outages and misleading customers.