• Coinbase reached an agreement to pay a $50 million penalty to New York state’s Department of Financial Services to settle accusations that it enabled customers to open accounts without conducting necessary background checks.
• The regulator stated that Coinbase violated the New York Banking Law and the New York State Department of Financial Services (DFS) virtual currency, money transmitter, transaction monitoring, and cybersecurity regulations.
• As per the settlement, the crypto exchange is also required to invest $50 million into its compliance program over the next three years.

Coinbase, one of the world’s leading cryptocurrency exchanges, has recently reached an agreement to pay a $50 million penalty to the New York Department of Financial Services (NYDFS) in order to settle allegations of enabling customers to open accounts without conducting necessary background checks. This agreement follows a lengthy investigation that was initiated by the NYDFS, which concluded that Coinbase had violated the New York Banking Law and the NYDFS regulations on virtual currency, money transmitter, transaction monitoring, and cybersecurity.

The settlement will require Coinbase to invest $50 million into its compliance program over the next three years. This includes hiring more personnel, developing more robust monitoring systems, and increasing the transparency of transactions. Additionally, Coinbase will report to NYDFS on its compliance efforts for the duration of the settlement.

The NYDFS investigation found that Coinbase had allowed customers to open accounts without verifying the customers’ identity and other information, including their source of funds. This led to a lack of oversight that could have resulted in the exchange being used for money laundering and other illicit activities. Coinbase has agreed to the terms of the settlement, and has agreed to take corrective measures in order to ensure that the exchange is compliant with state and federal regulations.

Coinbase has stated that it is “fully committed to upholding the highest standards of regulatory compliance” and that it “welcomes the opportunity to work with the NYDFS to ensure that it meets or exceeds its obligations.” Furthermore, the exchange has also stated that it will increase its efforts to provide a secure trading environment for its customers.

In response to the settlement, Coinbase stocks rose 12%, indicating that investors are confident in the company’s ability to meet its regulatory obligations. This news comes at a time when the cryptocurrency industry is under increased scrutiny from regulators and governments around the world, and Coinbase’s settlement with the NYDFS is seen as a positive step forward for the industry.

The settlement agreement between Coinbase and the NYDFS serves as a reminder that cryptocurrency exchanges must abide by the same laws and regulations as other financial institutions. By taking a proactive approach to compliance, Coinbase is setting an example for other exchanges to follow, and this could lead to more trust and transparency in the industry.