Coinbase to pay $100 million to settle with US regulators over anti-money-laundering law violations

Coinbase is making headlines again but not for the reasons the U.S.-based crypto exchange would like. Today, Coinbase Global has reached a $100 million settlement with New York’s Department of Financial Services (DFS), the exchange and the regulator said in statements on Wednesday.

According to a report from the New York Times, Coinbase agreed to “pay a $50 million fine after financial regulators found that it let customers open accounts without conducting sufficient background checks.” The settlement closes the regulator’s investigation into the firm’s compliance with requirements to prevent money laundering.

Overall, Coinbase will pay a $50 million fine for letting customers open accounts without conducting sufficient and proper background checks and another $50 million to improve compliance. The deal also requires Coinbase to work with a third-party monitor.

In a statement, Coinbase’s chief legal officer, Paul Grewal, said the crypto exchange has taken “substantial measures” to address what it called “historical shortcomings.”

The regular said that it found Coinbase treated its onboarding requirements for customers as a “simple check-the-box” and had not done sufficient background checks, DFS said in a statement.

The New York’s Department of Financial Services (DFS) has found problems with Coinbase’s anti-money-laundering controls as far back as 2018.

“We found failures that really warranted putting in place an independent monitor rather than wait for a settlement,” Adrienne A. Harris, New York State’s superintendent of financial services, said in an interview.

“We have been very outspoken about illicit financing concerns in the space. It is why our framework holds crypto companies to the same standard as for banks.”

The announcement comes about four months after the U.S.-based crypto exchange Coinbase funded a lawsuit against the U.S. Treasury over Tornado Cash sanctions due to the $7 billion crypto laundering scheme in September 2022. In July, the US Treasury put the notorious crypto startup on its sanctions list following the arrest of its 29-year-old developer who was arrested by the Dutch authorities.

Founded in 2012 by Brian Armstrong and Fred Ehrsam, the San Francisco, California-based Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. Since its inception nine years ago, Coinbase has raised a total of $847.3 million in funding over 14 rounds. Its latest funding was raised on December 21, 2018, from a secondary market round.

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• Source: https://techstartups.com/2023/01/04/coinbase-pay-100-million-settle-us-regulators-anti-money-laundering-law-violations/