Robinhood’s crypto unit fined $30 million

Robinhood’s crypto unit fined $30 million
Image Credits: WSJ

The New York State Department of Financial Services (NYDFS) fined the crypto trading unit of Robinhood $30 million for alleged violations of anti-money laundering and cybersecurity regulations.

Robinhood will also be required to retain an independent consultant to evaluate its compliance with NYDFS regulations.

In a statement, NYDFS Superintendent Adrienne A. Harris explained: “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.” 

Regulators added that Robinhood did not have enough staff or resources, and didn’t monitor transactions on a scale or timeline that was appropriate for the company’s growth in the past few years. They also “did not fully address [the unit’s] operational risks,” and did not list a phone number for customer complaints, which is a requirement under consumer protection laws.

The fine against Robinhood is the first crypto enforcement action of its kind by the NYDFS. Robinhood Crypto has been expecting these fines for over a year.

In 2020, Robinhood paid over $65 million to the Securities and Exchange Commission for providing misleading information to customers, and last year, was it was fined $70 million by the Financial Industry Regulatory Authority for harming customers with insufficient trading supervision, in addition to $10 million to the state regulator.

The company‘s associate general counsel of litigation and regulatory enforcement, Cheryl Crumpton, comments: “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.”

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