Regulators fined Coinbase $50 million after discovering that users could open accounts without reasonable background checks, violating anti-money laundering laws.In addition to investing $50 million to strengthen its compliance program, which is intended to deter drug dealers, child pornographers, and other potential lawbreakers from opening accounts with the exchange, following the settlement announced on Wednesday.
Coinbase must comply with the terms of the agreement. The digital exchange at the time of writing had a market valuation of about $8 billion and 100 million customers.
This is the latest blow to the once booming crypto trading industry on a global scale. Over the past year, a number of digital asset-based businesses have declared bankruptcy, most notably FTX, which, before its demise in November, was the second-largest crypto exchange in the world.
Although the regulator recognized that Coinbase had made attempts to address the issue, it reprimanded the business for its delayed progress, which it partially attributed to a subpar compliance structure that was unable to meet Coinbase's needs. By the end of 2021, Coinbase had a backlog of over 100,000 unreviewed transaction monitoring alerts (many of which were months old), as well as a backlog of over 14,000 customers that needed enhanced due diligence ("EDD").
The independent monitor will continue to engage with Coinbase as per the provisions of the agreement for an additional year, with the NYDFS having the option to extend this time frame.
However, the Securities and Exchange Commission is still investigating the American-based digital exchange over the sale of alleged securities. Subpoenas have also been issued regarding the listing process and various stake products.
