Coinbase shares increase by 12 % after $ 100 million

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The Cryptocurrency Exchange Coinbase has made an agreement to pay a punishment of $ 50 million to the New York State Ministry of Finance in order to enable customers to open accounts without carrying out accounts without carrying out the necessary background tests.

The supervisory authority said that Coinbase had violated the New York Banking Act and the regulations of the New York State Department of Financial Services (DFS) for virtual currency, money transmitters, transaction monitoring and cyber security.

According to the agreement, the crypto exchange must also invest $ 50 million in its compliance program over the next two years.

The 100 dollar billing

In an explanation, Superintendent of Financial Services Adrienne A. Harris said that compliance violations would have exposed the platform, among other things, serious criminal acts such as fraud, possible money laundering, presumed sexual abuse of children and potential drug trafficking.

"Coinbase failed to build up and maintain a functioning compliance program that could keep up with its growth. This error suspended the Coinbase platform of potential criminal activities that forced the ministry to take up immediate measures, including the installation of an independent monitor."

The platform based in San Francisco has been licensed in New York since 2017 for the implementation of virtual currency operations and money transfer shops in New York. After NYDFS carried out an exam and assertive examination in early 2022, the company's compliance program could not keep up with the pace of its business growth.

The banking secret law/anti-money laundering program from Coinbase, including Know Your Customer/Customer Due Diligence, transaction monitoring system and reporting of suspicious activities, was considered inadequate. The New York supervisory authority also said that the Sanctions Compliance systems of the crypto exchange are unsatisfactory for a financial service provider of his "size and complexity".

Explanation of Coinbase

Coinbase had a brutal year after his trade revenues had collapsed by 50 % compared to 2021. The share has been declining by over 84 % since the beginning of the year and is currently being traded near $ 38, even though it was pumped in double digits after the agreement.

The collapse of Sam Bankman-Fried's crypto empire last year pulled the industry down and damaged the credibility of the room, with questions about the remaining centralized crypto exchanges.

Paul Grewal, who Legal Officer from Coinbase, said the team said that the industry is at a “turning point”, since every step of a prominent player requires an intensive examination. According to reports, the company cooperates with an investigation of the NYDFs in relation to its historical compliance program.

Grewal admitted, where Coinbase was neglected, claimed that the company "welcomes possibilities to improve its programs".

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