New York regulators announced on January 4 that cryptocurrency exchange Coinbase will pay a $50 million fine and invest more than $50 million in a compliance program, following a settlement with the New York State Department of Financial Services.
The fine was issued after regulators found that the company allowed customers to open accounts without conducting adequate background checks, which could violate Anti-Money Laundering laws. The company’s failure to properly identify customers and monitor their activities for suspicious activity was initially identified during a routine inspection in 2020, but regulators determined that the company’s problems persisted, prompting a formal investigation in 2021.
Coinbase faced a backlog of more than 100,000 alerts on potentially suspicious customer transactions that were not reviewed, and was found to perform only basic “Know Your Customer” checks before allowing people to open accounts.
This is a developing story, and further information will be added as it becomes available.