Robinhood’s $30M USD Regulatory Fine May Already Be a Lesson Learned
Handed down by NY’s DFS as a result of cybersecurity and anti-money laundering violations.
The New York Department of Financial Services (DFS) shared Tuesday, August 2, that Robinhood will be issued a $30 million USD fine for its crypto arm’s failure to comply with regulatory standards surrounding anti-money laundering, cybersecurity, and consumer protection.
#ICYMI: DFS Superintendent Harris Announces $30 Million Penalty on Robinhood Crypto for Significant Anti- Money Laundering, Cybersecurity & Consumer Protection Violations. Read more: https://t.co/TUD2SwmOcw
— NYDFS (@NYDFS) August 2, 2022
When people think of crypto platforms, the first thought is not usually Robinhood. Though the platform has been hard at work in the space since 2018 when it first began listing cryptocurrencies and has since garnered interest and investment from names like FTX’s Sam Bankman-Fried.
Despite its growth, the platform is now facing a fine as a result of “significant failures,” according to DFS Superintendent Adrienne A. Harris.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” said Superintendent Harris, adding that “all virtual currency companies licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services companies.”
Regulatory policy in the crypto space in the U.S. is reaching a critical point where a standardized set of guidelines will need to be reached. As of now, there are over five parties that weigh in on such regulations, each with its own definitions of assets and procedural practices.
The fine is not the only hurdle the platform is facing, like others in the crypto winter, it has had to lay off a number of its staff members — most recently 23%.
However, Robinhood is still set on providing a convenient and accessible crypto experience for users, as it did when it first made its claim to fame by democratizing investing for the masses. That platform has now expanded to offer a wide variety of tokens and a self-custody Web3 wallet — allowing users to trade and swap crypto with no network fees.
— Robinhood (@RobinhoodApp) July 7, 2022
After reaching a settlement with the DFS, going forward Robinhood Crypto will be required to retain an independent consultant that will perform a comprehensive evaluation of the platform to maintain future compliance.
Elsewhere in crypto, adoption continues to press on despite hacks, scams, and exploits.