New York Regulators Slap Robinhood’s Crypto Business With $30 Million Fine

In what looks to be a string of challenges facing the company, Robinhood’s crypto division has fined 30 million dollars by the New York State Department of Financial Services. This is the first crypto-focused enforcement action by the regulator, which has issued a multi-million dollar penalty against Robinhood for what it says is a violation of anti-money laundering and cybersecurity regulations. gorvernment’s. In it notificationThe Financial Services division said it found significant deficiencies in the company’s compliance programs following a surveillance audit.

Apparently, there aren’t enough people working on Robinhood’s money laundering compliance program. The company was also unable to transition from a manual monitoring system, which is no longer sufficient as it is much larger than it was when it started. In addition, the department also found that the policies in Robinhood’s cybersecurity program do not fully comply with official regulations on cybersecurity and virtual currencies.

The New York regulator also mentioned that the certified Robinhood is not compliant with the Department’s Transaction Supervision Regulations and Cybersecurity Regulations. Because it doesn’t fully comply with state cybersecurity rules, Robinhood broke the law by declaring compliance. Finally, the regulator said Robinhood failed to comply with consumer protection requirements by failing to maintain a separate phone number (and display on its website) dedicated to consumer complaints. use.

The Director of Financial Services, Adrienne A. Harris, said in a statement:

“As the business grew, Robinhood Crypto failed to invest the proper resources and attention in developing and maintaining a culture of compliance — a failure that resulted in a serious breach of anti-laundering regulations. Department of Money and Cybersecurity All New York State-licensed virtual currency companies are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as financial services companies DFS will continue to investigate and take action when any licensee violates laws or Department regulations, which are critical to protecting consumers and ensuring safety and health. of organizations.”

In addition to paying $30 million, Robinhood must hire an independent consultant who will evaluate whether it has taken appropriate actions to address its violations and omissions under the settlement. not yet.

Robinhood also recently announced that it lay off 23 percent its workforce due to record inflation and the demise of cryptocurrencies. It’s from the company second round of job cuts this year and will affect employees across departments. That revelation came after Robinhood its earnings announcement for Q2 2022, where it posted a net loss of $295 million and reported a drop of 1.9 million monthly active users.

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