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Robinhood crypto fined $30M for failing cybersecurity regulations

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Joyashree Dey Follow

INDIA

Aug, 05 2022

Aug, 05 2022

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On August 2, the New York Department of Financial Services (DFS) slapped a $30 million fine on the crypto arm of trading app Robinhood for allegedly violating the bank secrecy act, anti-money laundering, and cybersecurity regulations. 


“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” DFS Superintendent Adrienne A. Harris said.  


Other than the $30 million penalty, Robinhood Crypto will be needed to hold an independent consultant that will play out a thorough assessment of its compliance with the DFS guidelines. 


It seems Robinhood crypto has already seen the DFS’s fine coming and it was ready to pay US$30 million from last year. 


There are some lacked resources of Robinhood crypto founded by DFS investigation including manpower, to maintain compliance with regulatory requirements. 


The DFS examination found that Robinhood crypto needed assets, including labor, to keep up with consistency with administrative necessities. 


“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 announcement continues. 


In 2021, the Financial Industry Regulatory Authority (FINRA) demanded a $70 million fine on Robinhood for giving false information and failing to safeguard clients against outages. 


The New York State regulator endorsed applications of Robinhood Crypto for a virtual currency license and a money transmission license in January 2019, by saying: “DFS has authorized Robinhood Crypto to offer services for buying, selling, and storing seven virtual currencies, including bitcoin, ether, bitcoin cash, and litecoin.” 


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Joyashree Dey

CBW - External Analyst

INDIA

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