Even as trading platform Robinhood continues to expand its crypto related operations, it is now faced with regulatory headaches. A New York state department had on Tuesday said the company’s crypto arm violated certain regulations. In a first in crypto enforcement, the New York State Department of Financial Services penalized Robinhood for crypto related violations.
Robinhood Crypto Violation Attracts Penalty
According to a Wall Street Journal report, the crypto arm of Robinhood Markets faces a $30 million penalty due to regulatory violations. The company allegedly violated regulations related to anti-money-laundering and cybersecurity. Robinhood’s crypto vertical “failed to maintain and certify compliant anti-money-laundering and cybersecurity programs.”
The report added that the company now needs to deploy an an independent consultant to evaluate its compliance with NYDFS’s regulations and its remediation efforts. The state financial services department said it found violations in the company’s activities through a supervisory team. It added that an enforcement investigation of Robinhood was performed after violations were found. As a result of the company’s shortcomings, the New York department found significant failures on Robinhood’s side, the report said.
“The failures resulted from shortcomings in the company’s management and oversight of its compliance programs. These include failures to foster and maintain a culture of compliance and to allocate adequate resources to the programs, particularly as the company grew quickly, which exacerbated the issues.”
“Robinhood Failed To Comply With Anti-money-laundering Rules”
The department claimed that Robinhood did not have enough resources in running the Bank Secrecy Act and anti-money-laundering compliance. Also. the company did not address operational risks, among other compliance violations, it said.
Adrienne A. Harris, superintendent of the New York State Department of Financial Services, said,
“DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.”
Recently, Robinhood enabling support for transfer for all listed cryptocurrency assets on its platform. Robinhood allows transfer of major cryptocurrencies like Bitcoin, Polygon, and SHIB. In another news, it was speculated that FTX CEO Sam Bankman-Fried was planning to acquire the Robinhood trading platform.