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Cryptocurrency – Compliance Issues | Mintz

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July was a sizzling month for crypto enforcement, however August is off to a sizzling begin in its personal proper. On August 2, 2022, the New York State Division of Monetary Companies (the “Division”) issued a Consent Order with Robinhood’s crypto division for failing to adjust to state laws governing cash laundering and cybersecurity. Because of this, Robinhood Crypto can pay a $30 million penalty.

The NYSDFS Consent Order signifies that on account of “a security and soundness examination,” severe deficiencies had been found, prompting an enforcement investigation into the assorted compliance failures associated to anti-money laundering, cybersecurity, and digital foreign money laws. As Superintendent of Monetary Companies, Adrienne A. Harris, described it in saying the penalty, “Robinhood Crypto failed to take a position the right sources and a spotlight to develop and preserve a tradition of compliance—a failure that resulted in vital violations of the Division’s anti-money laundering and cybersecurity laws.” 

The Division claimed that two broad classes of Robinhood’s crypto  compliance routine had been missing: (1) an efficient BSA/AML program with satisfactory transaction monitoring techniques; and (2) compliance with the Division’s Cybersecurity Laws. Because the Consent Order places it, the deficiencies had been “exacerbated by a scarcity of prominence” for Robinhood Crypto compliance throughout the broader group, and Robinhood Crypto performed no significant position in compliance efforts on the entity stage.”  Merely put, the Division considered Robinhood Crypto’s compliance routine as lagging method behind the expansion of the corporate.      

This information comes on the heels of a current SEC Criticism alleging {that a} former Coinbase worker engaged in an insider buying and selling scheme involving 9 cryptocurrency tokens listed on Coinbase. The SEC Criticism was a big enforcement occasion within the crypto area as a result of it was the primary time the company labeled cryptocurrencies as securities. It’s but to be seen what the SEC Criticism means for these cryptocurrency issuers and the exchanges that listing these tokens on the market. 

Though the SEC Criticism grabbed stands out as the story of the summer time, the Consent Order involving Robinhood Crypto is a superb reminder that compliance issues.  

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