- Robinhood didn’t put up a devoted telephone quantity for shopper complaints, violating buyer safeguard measures
- The settlement with Robinhood is the regulator’s first crypto enforcement
New York’s monetary regulator has imposed a $30 million penalty on Robinhood’s cryptocurrency division for failing to commit ample assets to its compliance packages.
The damages imposed have been resulting from important violations of anti-money laundering, cybersecurity and investor safety rules, the New York State Division of Monetary Providers (NYFDS) mentioned on Tuesday.
On prime of the penalty, Robinhood Crypto has to retain an unbiased advisor to judge its compliance with the regulator’s corrective efforts. This marks the NYDFS’ first crypto-related enforcement motion.
Upon investigation, it discovered the crypto arm was inadequately staffed and did not transition from a handbook transaction monitoring system to at least one extra acceptable for the agency’s measurement and transaction volumes. The cybersecurity program, in the meantime, didn’t handle operational dangers and didn’t totally adjust to the division’s rules, the monetary watchdog mentioned.
“As its enterprise grew, Robinhood Crypto failed to take a position the right assets and a spotlight to develop and preserve a tradition of compliance—a failure that resulted in important violations of the division’s anti-money laundering and cybersecurity rules,” Adrienne Harris, superintendent of monetary companies, mentioned in an announcement.
The regulator alleged that regardless of flaws within the buying and selling app’s packages, Robinhood licensed compliance with the division in violation of the legislation. It additionally disregarded a shopper safety requirement by failing to place up a definite and devoted telephone quantity on its web site for complaints.
Not all authorized consultants are satisfied that the regulatory motion is in one of the best curiosity of shoppers. Collins Belton, Managing Companion at Brookwood P.C., famous that one among NYDFS’ complaints is that Robinhood exercised compliance assets throughout firm divisions slightly than sustaining an unbiased crew centered on crypto.
Robinhood mentioned in July final 12 months that it anticipated to pay a $30 million superb to the NYDFS and would interact a monitor. It additionally warned worldwide enlargement may include elevated compliance prices.
“We’re happy the settlement in precept reached final 12 months and beforehand disclosed in our public filings is now last,” Cheryl Crumpton, Robinhood’s affiliate normal counsel of litigation and regulatory enforcement, mentioned in an emailed assertion.
“We’ve got made important progress constructing industry-leading authorized, compliance, and cybersecurity packages, and can proceed to prioritize this work to greatest serve our clients,” she added.
The agency slashed 23% of its workforce this week, however the influence on its crypto buying and selling division isn’t clear.
Get the day’s prime crypto information and insights delivered to your inbox each night. Subscribe to Blockworks’ free publication now.