Robinhoods Crypto Arm Hit With $30 Million Fine By State Regulator

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Topline

New Yorks financial regulator has fined Robinhoods cryptocurrency subsidiary $30 million after an investigation which the agency says found the company broke anti-money laundering and cybersecurity rules, the latest massive penalty facing the online brokerage.

Robinhood’s logo dis isplayed on a phone screen and representation of cryptocurrencies are seen in … [+] this photo illustration.

NurPhoto via Getty Images Key Facts

Robinhood agreed to a settlement with the New York Department of Financial Services under which it will also be required to hire an independent compliance consultant.

The probe found significant shortcomings in the compliance program of Robinhood Crypto, where users can buy and sell cryptocurrency, the regulator said.

Robinhood Crypto failed to monitor transactions adequately, didnt properly staff its anti-money laundering compliance unit, and didnt comply with state cybersecurity guidelines, authorities said.

Its the latest penalty against Robinhood: the Securities and Exchange Commission fined the firm $65 million in December 2020 and the Financial Industry Regulatory Authority fined the company $70 million in June 2021, both for several violations mostly tied to misleading customers.

Robinhood is pleased the penalty is finalized, Cheryl Crumpton, the companys associate general counsel of litigation and regulatory enforcement, said in a statement provided to Forbes, asserting that it has made significant progress in building out its legal, compliance and cybersecurity teams.

Key Background

The fine matches the $30 million Robinhood said it expected to pay as a result of the probe in regulatory filings last month. This was the first cryptocurrency penalty levied by New Yorks financial regulator, according to the Wall Street Journal, following a slew of other crackdowns in the industry. Robinhoods stock price is down nearly 75% since going public last July. A 20-year-old Robinhood consumer tragically died by suicide in 2020 after seeing an incorrect negative balance of over $700,000 on the platform, and his death was cited by the Financial Industry Regulatory Authority in its fine against Robinhood.

Further Reading

Robinhoods Troubles Could Get Worse As Stock Hits Record Low Amid Layoffs And Looming Quarterly Earnings (Forbes)

Robinhood Pays $65 Million To SEC For Misleading Customers Who Lost $34 Million On Lower Trade Prices (Forbes)

Robinhood Fined $70 Million For Significant Harm To Customers Ahead Of IPO (Forbes)

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