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Coinbase’s billboard in Times Square, New York, during the company’s initial public offering on the Nasdaq on April 14, 2021.
Robert Nickelsberg | Getty Images
coin base Settlement with both parties, New York state financial regulators announced On Wednesday, we will pay a $50 million fine and invest an additional $50 million in compliance efforts. Regulators from the New York Financial Services Authority said the company has failed anti-money laundering programs for years.
Coinbase stock surged more than 12% on the news of the settlement. The company The only listed cryptocurrency exchange in the USCoinbase revealed its regulatory investigation in a 2021 10-K filing with the SEC.
The latest enforcement actions come after both state and federal regulators stepped up their efforts in the wake of the November incident. Collapse of FTXwas once one of the largest crypto exchanges in the world.
Major players such as Grayscale Bitcoin Trust rely on Coinbase to keep assets in cold storage, and the company prominently advertises its compliance and security efforts in SEC filings and online. The exchange holds licenses in the US and around the world.
The agreement includes a $50 million fine and another commitment from Coinbase to invest $50 million in compliance programs over two years, said Paul Grewal, Coinbase’s chief legal officer. said in a statement.
According to the consent order, the regulator wrote that Coinbase’s compliance deficiencies led to “encouraging questionable or illegal activity through Coinbase’s platform.”
In one case, a Coinbase customer charged with “offenses related to child sexual abuse” was not flagged by Coinbase’s system when the user joined the exchange, regulators said. It writes. For more than two years, the user was involved in “suspicious transactions that may be related to undetected illegal activity,” according to the regulator. Coinbase eventually identified the user, closed the account, and reported the activity to law enforcement.
The company said it has committed to remediate issues identified by regulators. The Coinbase leadership team has long pushed for broader and clearer regulation of the crypto space.
Despite the popular belief that cryptocurrency companies do not want to be regulated, many, if not most, have worked with policymakers for years, said Coinbase CEO. says. Written by Brian Armstrong In a CNBC op-ed.
Coinbase, like many tech industries, has had to increase headcount and scale back capital-intensive projects. 18% reduction in workforce by summer 2022The headcount reduction comes after a declining user base and a 27% year-over-year revenue decline.
