Robinhood’s crypto subsidiary was fined $30 million in New York for cybersecurity and anti-money laundering violations. The New York State Department of Financial Services imposed the penalty for failing to stop illegal trading on its platform.
Robinhood’s transaction monitoring protocols reportedly had “serious weaknesses.” Further investigation is underway. Press release:
The department found severe flaws in RHC’s administration and monitoring of its compliance processes, including a failure to establish and sustain a culture of compliance. The government also found that RHC’s compliance programs lacked enough resources, which aggravated the problems.
Robinhood is accused of failing to hire and train staff to prevent illegal financial activities. The Department of Financial Services claims Robinhood didn’t recognize all trading dangers and didn’t respond with enough tenacity.
Robinhood maintains it’s done nothing improper and has worked hard to assure financial compliance. Associate general attorney Chery Crumpton explained:
We’ve made advances in legal, compliance, and cybersecurity. We’ll prioritize this effort to serve our customers. We’re delighted to offer an accessible, low-cost platform to buy and sell crypto and thrilled to grow our business responsibly with new products and services.
Robinhood has been controversial since early 2021. In January, bitcoin, Dogecoin, and numerous equities rose rapidly, so everyone wanted in. Robinhood paused all trades to safeguard traders from a possible fraud or other illegal activity.
The company’s plans
Customers didn’t like the move and sued the corporation, claiming executives prohibited them from investing. Robinhood just announced intentions to lay off 23% of its staff.
Along with the penalties, Robinhood must employ an independent financial expert to evaluate its compliance activities and enforce remedies where necessary.