Coinbase hit with regulation: $100 million fine for negligence

The reward of success? – In the madness of the previous running of the bulls, Coinbase was shocked by the number of new registrants on its platform. Caught between wild growth in its user base and tighter regulation, the exchange it lacked toughness. And for the most regulated exchangeit is a serious offense directly sanctioned by government authorities.

A huge fine for Coinbase

100 million dollars of plum. Maybe it is that Coinbase juggernaut will not be caught twice. of New York State Department of Financial Services (NYDFS) has sanctioned the publicly traded company since May 2021. And it didn’t go with the back of the spoon. $50 million in fines and $50 million in mandatory investments for Coinbase to strengthen its compliance program. This is in line with anti-money laundering regulations.

is’deal which was found between crypto giant and the US agency to close the dispute. A dispute arising from shortcomings of exchange in identity verification of its users and in it alarm system for certain transactions, mainly in 2020 and 2021 which marked the beginning of Bitcoin’s recent growth streak.

Coinbase is chastised by US regulators for lax controls

“Coinbase has lacked the staff, resources and tools to keep pace with these various alerts that have grown to unmanageable levels for the business. »

Extract from the agreement

At the end of 2021, it was even more than 100,000 transaction alerts unstudied and more than 14,000 ID verifications late. Coinbase has what is called a bitlicense provided by NYDFS. It is one of more difficult financial licenses in terms of US crypto regulation. This license led to a deeper study of Coinbase’s activities. And the discovery of an incident in early 2021 precipitated the $100 million penalty received by the crypto-juggernaut today.

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The $150 million exchange blunder

So the story begins at the beginning of 2021. A smart guy named Jean-Claude manages to create a Coinbase account in the name of a company posing as one of its employees. The name of the latter was not specified in the report. Without the proper supporting documents, the maneuver is normally impossible, but Jean-Claude pulls it off. At the same time,bouncer also manages to access the real bank account of the company in question and increases the withdrawal limit by a factor of 50.

Neither one nor two, he transfers all the funds from the bank account, ie approx 150 million dollars to Coinbase and turns them into crypto. He then sends them to one of his private wallets. And the case is in the bag. Coinbase remained unaware of the story for the next 6 days until the defrauded bank contacted them. Jean-Claude was finally found and the company was able to recover his Dusse.

Coinbase’s goal is clear. of compliance remains the main word. The crypto giant has announced that it wants to stay as close to regulatory bodies as possible. Moreover, it wants to be beyond reproach, a model of compliance in the crypto world, in order to maintain the trust of its customers. Coinbase shares also gained 9% following this announcement.

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