Coinabase CLO claims that the company is willing to "acknowledge where <they> have fallen short.”
Coinbase, an American cryptocurrency exchange established in 2012 by Brian Armstrong and Fred Ehrsam, has settled with the New York State Department of Financial Services (NYDFS).
According to the press release shared by NYDFS on January 4th, Coinbase will pay a $50 million fine for violating New York financial service and banking laws. On top of that, the company has agreed to invest no less than $50 million in its compliance program.
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In the press release, NYDFS revealed that Coinbase violated the New York State Department of Financial Services (DFS) transaction monitoring, virtual currency, money transmitter and cybersecurity regulations.
NYDFS claims that due to these violations, Coinbase became vulnerable to money laundering, fraud, "suspected child sexual abuse material-related activity, and potential narcotics trafficking."
When talking about the matter, Superintendent of NYDFS Adrienne A. Harris emphasized that it is crucial for financial institutions, including crypto-related firms, to protect their systems from malicious actors. On top of that, regarding the Coinbase case, Harris stated:
Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity requiring the Department to take immediate action including the installation of an Independent Monitor.
In response to the NYDFS announcement, Coinbase Chief Legal Officer (CLO), Paul Grewal, took to Twitter to share his thoughts on the matter. In an extensive Twitter thread, Grewal stated:
While no company wants to be in this situation, this consent order reflects our commitment to continuous improvement, our engagement with key regulators, and our push for greater compliance in the crypto space - including for ourselves.
Nevertheless, the man said that Coinbase is willing to "acknowledge where <they> have fallen short” and work on “making the industry a safer, more compliant space."
In other Coinbase-related news, at the end of December, Coinbase received approval from the Central Bank of Ireland to operate as a Virtual Asset Service Provider (VASP).