Robinhood Crypto Faces $30 Million Penalty from NYDFS

On Tuesday, the New York State Department of Financial Services (NYDFS) slapped a $30 million fine against the crypto division of Robinhood. This was due to alleged violations of anti-money laundering and cybersecurity regulations. The regulator found Robinhood Crypto lacking in staff and resources to address the significant risks.

“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,” explained NYDFS Superintendent Adrienne Harris. This recent penalty marks a first in the NYDFS’s crypto-sector enforcement.

The NYDFS also requires Robinhood to retain an independent consultant to evaluate its compliance. Last year, Robinhood Crypto said that it expected a $30 million settlement to NYDFS. This was after a 2020 investigation was conducted centered on anti-money laundering and cybersecurity-related issues. Robinhood has faced a number of monetary penalties imposed by regulators.

Earlier in 2020, the platform paid $65 million following a probe by the Securities and Exchange Commission (SEC) over misleading customers. In 2021, the Financial Industry Regulatory Authority (FINRA) also slapped a $70 million fine on Robinhood for failing to protect its users. Nonetheless, the platform has committed to implementing the necessary improvements.

“We are pleased the settlement in principle reached last year and previously disclosed in our public filings is now final. We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers,” noted Robinhood’s associate general counsel of litigation and regulatory enforcement, Cheryl Crumpton.

Sources: CNBC, CoinDesk