Robinhood’s crypto arm hit with $30 million fine by state regulator
Top line
New York’s financial regulator has fined Robinhood’s cryptocurrency subsidiary $30 million after an investigation the agency says found the company violated anti-money laundering and cybersecurity rules, the latest massive penalty the online brokerage faces.
Robinhood’s logo appears on a phone screen and representation of cryptocurrencies appears in … [+]
Keywords
Robinhood agreed to a settlement with the New York Department of Financial Services where it will also be required to hire an independent compliance consultant.
The investigation found “significant deficiencies” in the compliance program of Robinhood Crypto, where users can buy and sell cryptocurrency, the regulator said.
Robinhood Crypto failed to adequately monitor transactions, did not properly staff its money laundering compliance unit and did not comply with government cybersecurity guidelines, authorities said.
It’s the latest punishment against Robinhood: the Securities and Exchange Commission fined the firm $65 million in December 2020 and the Financial Industry Regulatory Authority fined the company $70 million in June 2021, both for multiple violations that were mostly related to misleading customers.
Robinhood is “pleased” that the sentence has been completed, Cheryl Crumpton, the company’s general counsel for litigation and regulatory enforcement, said in a statement provided to Forbes, claims it has made “significant progress” in building out its legal, compliance and cyber security teams.
Key background
The fine matches the $30 million that Robinhood said it expected to pay as a result of the investigation in regulatory filings last month. This was the first cryptocurrency penalty imposed by New York’s financial regulator, according to The Wall Street Journal, after a number of other actions in the industry. Robinhood’s share price has fallen almost 75% since it went public last July. A 20-year-old Robinhood consumer tragically died by suicide in 2020 after seeing an erroneous negative balance of over $700,000 on the platform, and his death was cited by the Financial Industry Regulatory Authority in its fine against Robinhood.
Further reading
Robinhood’s woes could worsen as its stock hits record lows amid layoffs and looming quarterly earnings (Forbes)
Robinhood pays $65 million to SEC for misleading customers who lost $34 million on bad trading prices (Forbes)
Robinhood fined $70 million for “significant harm” to customers ahead of IPO (Forbes)
