$50M fine for Coinbase from NY regulators

Key points: 

• Coinbase is being criticized for allowing customers to register accounts without proper verification and background checks.
• The New York State Department of Financial Services levied a $50 million fine against the exchange after being informed of the situation.
• The punishment is based on the violation of anti-money laundering laws.

Coinbase is mandated to spend $50 million on its compliance program

According to the terms of the agreement released on Wednesday, Coinbase is also obligated to spend $50 million on its compliance program. This policy is intended to prevent criminals and drug traffickers from obtaining a Coinbase account.

The cryptocurrency exchange was initially scrutinized during a routine audit in 2020. The investigation revealed issues with the exchange's anti-money laundering procedures in 2018. Over 100,000 alerts regarding unusual customer transactions were also documented by late 2021. According to the regulators, the exchange only conducted rudimentary checks before allowing individuals to open an account with the exchange.

“We found failures that really warranted putting in place an independent monitor rather than wait for a settlement,”

- NY State’s superintendent Adrienne A. Harris.

Exchanges have been subject to regulatory scrutiny since the failure of FTX. The downfall of one of the largest cryptocurrency exchanges led to a decrease in faith in centralized exchanges.