The crypto division of trading app Robinhood was hit with a US$30 million punishment by the New York Department of Financial Services (<a href="https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202208021" target="_blank" rel="nofollow noopener">NYDFS</a>) on Tuesday for allegedly breaking cybersecurity, anti-money laundering, and bank secrecy laws. To assure compliance with the NYDFS laws, the financial regulator also requested that the company hire an impartial consultant.

According to NYDFS Superintendent Adrienne A. Harris, as its business expanded, Robinhood Crypto failed to invest the necessary resources and attention to develop and maintain a culture of compliance, resulting in significant violations of the Department's <a href="https://www.cryptoknowmics.com/news/hong-kong-planning-strict-rules-for-crypto-platforms-through-aml-law/" target="_blank" rel="noopener">anti-money laundering</a> and cybersecurity regulations.
<h2>Robinhood Lacks Workforce</h2>
Knowing what was coming, Robinhood Crypto indicated last year that it anticipated paying the NYDFS US$30 million. The NYDFS inquiry discovered that Robinhood lacks the workforce and resources necessary to maintain regulatory compliance. It took too long for the company to move away from a manual transaction monitoring system that was inadequate for its size. Robinhood also didn't devote enough resources to addressing the risks unique to the business.

Robinhood was fined US$70 million in 2021 by the Financial Industry Regulatory Authority (FINRA) for providing false information and failing to shield customers from interruptions. They also warned Robinhood for not giving customers a specific phone number to call with complaints. In New York, the price of Robinhood shares rose 2.1 percent to US$9.23 due to the announcement and the uncertainty about the fine.

Crypto Arm of Robinhood Fined US$30 Million For Compliance Failures

The crypto division of trading app Robinhood was hit with a US$30 million punishment by the New York Department of Financial Services (NYDFS).

Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.

Crypto Arm of Robinhood Fined US$30 Million For Compliance Failures

Top Picks