The Robinhood app’s cryptocurrency unit has been hit with a $30 million fine in New York for allegedly violating anti-money-laundering and cybersecurity regulations.
The New York State Department of Financial Services accused the online brokerage this week of failing to invest the proper resources into its anti-money-laundering compliance program.
In a press release on the fine, which represents the department’s first cryptocurrency enforcement action, regulators said that an investigation into Robinhood Crypto (RHC) found that the company’s transaction monitoring system had “significant deficiencies.”
The business was also accused of failing to hire and properly train enough staff for both its anti-money-laundering and cybersecurity compliance programs, which “did not fully address RHC’s operational risks.”
“All of these deficiencies resulted from what the Department found were significant shortcomings in the management and oversight of RHC’s compliance programs, including a failure to foster and maintain an adequate culture of compliance,” the press release said. “The Department also discovered that adequate resources were not devoted to RHC’s compliance programs, particularly as it grew, which exacerbated these issues.”
In response to the fine, Robinhood’s associate general counsel Cheryl Crumpton defended the company’s efforts at compliance.
“We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers,” Crumpton said. “We remain proud to offer a more accessible, lower-cost platform to buy and sell crypto and are excited to continue to grow our business in a responsible manner with new products and services that our customers want.”
Aside from the fine, Robinhood will also be required to retain an independent consultant to carry out a “comprehensive evaluation of the RHC’s compliance with the Department’s Regulations and RHC’s remediation efforts with respect to the identified deficiencies and violations.”
The enforcement is just the latest issue to face the company, which also just announced its plans to lay off 23% of its workforce. The decision came after Robinhood’s second-quarter earnings reported showed a decline in its assets as well as its monthly active users.
To make matters worse, the value of Robinhood’s stock has also plunged 89% in just the last year.
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