In the newest in what appears to be a string of challenges the corporate has to grapple with, Robinhood’s crypto division has been slapped with a $30 million fine by the New York State Department of Financial Services. It’s the primary crypto-focused enforcement motion by the regulator, which has issued the multimillion greenback penalty in opposition to Robinhood for what it says are violations in opposition to the state’s anti-money laundering and cybersecurity laws. In its announcement, the Financial Services Department stated it discovered important deficiencies within the firm’s compliance applications following a supervisory examination.
Apparently, there weren’t sufficient folks working in Robinhood’s cash laundering compliance program. The firm additionally didn’t transition from a handbook monitoring system, which is not enough now that it is a lot bigger than when it began. In addition, the division discovered that insurance policies inside Robinhood’s cybersecurity program aren’t in full compliance with official cybersecurity and digital foreign money laws.
The New York regulator additionally talked about that Robinhood improperly licensed compliance with the Department’s Transaction Monitoring Regulation and Cybersecurity Regulation. Since it wasn’t absolutely compliant with the state’s cybersecurity guidelines, Robinhood violated the regulation by claiming compliance. Finally, the regulator stated Robinhood failed to stick to client safety necessities by not sustaining a separate cellphone quantity (and displaying it on its web site) particularly for client complaints.
Superintendent of Financial Services, Adrienne A. Harris, stated in a press release:
“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. All virtual currency companies licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services companies. DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.”
Aside from having to pay $30 million, Robinhood should retain an impartial marketing consultant who will consider if it has taken the suitable actions to handle its violations and deficiencies beneath the settlement.
Robinhood additionally just lately introduced that it is shedding 23 % of its workforce as a consequence of report inflation and the cryptocurrency crash. It’s the corporate’s second spherical of job cuts this yr and can have an effect on staff throughout divisions. That revelation got here after Robinhood published its earnings for the second quarter of 2022, whereby it posted a internet lack of $295 million and introduced a lower of 1.9 million in month-to-month lively customers.
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