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Monday, January 29, 2024

Robinhood crypto unit fined $30M by New York regulator

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Robinhood Markets Inc.’s cryptocurrency arm was fined $30 million by New York’s monetary regulator after the brokerage was accused of violating anti-money-laundering and cybersecurity guidelines.

The unit should enlist an impartial marketing consultant to watch compliance, in response to an order filed Tuesday. The agency disclosed final yr that it anticipated to pay the penalty.

The enforcement motion by the New York State Division of Monetary Companies underscores the continued regulatory scrutiny Robinhood faces, even because it pushes a message to buyers that it’s taking a “security first” stance towards digital tokens.

Robinhood took a defective strategy to crypto buying and selling compliance at a time of speedy progress for the Menlo Park, California-based firm, in response to the regulator, which alleged that the brokerage lacked enough employees and assets to make sure compliance with the Financial institution Secrecy Act and anti-money-laundering guidelines.

The agency had used a guide system to overview transactions, which the monetary watchdog referred to as “unacceptable” for a enterprise averaging greater than 100,000 transactions a day totaling $5.3 million in September 2019. Automated transaction monitoring is a safeguard towards cash laundering that might be typical for an organization of its measurement, the regulator mentioned.

Robinhood, which is about to report second-quarter outcomes Wednesday, didn’t have such automated overview methods in place when the investigation started, and it took the corporate months to transition to at least one.

Shares of Robinhood have been little modified, buying and selling for $9.03 apiece at 10:19 a.m. in New York. The inventory has dropped 49% this yr.

— By Annie Massa (Bloomberg)

— With help from Alex Nguyen


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