Robinhood’s crypto division fined $30 million
The New York City Department of Financial Services accused the company of violating AML and cybersecurity regulations
03.08.2022 - 09:00
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What’s new? The New York State Department of Financial Services (NYDFS) conducted a supervisory exam of the crypto division of the online broker Robinhood. As a result, the regulator found violations of anti-money laundering law and cybersecurity policies. NYDFS decided to fine the broker for $30 million, The Wall Street Journal reports.
What violations were found? The NYDFS noted that Robinhood did not have enough staff to comply with AML and Bank Secrecy Act requirements. Thus, transactions were monitored manually, which is inappropriate for the size of the company and the volume of transactions. Also, the broker has not addressed operational risks, and its policies do not comply with NYDFS cybersecurity and crypto regulations. Robinhood also failed to comply with consumer protection requirements because its website does not have a telephone number for complaints.
In addition to paying the fine, Robinhood is required to hire an independent consultant to evaluate its operations for compliance with NYFDS’s regulations.
Amid this news, the broker’s co-founder and CEO, Vlad Tenev, reported that Robinhood is cutting 23% of its staff. The decision comes amid a deteriorating macroeconomic environment and the situation in the cryptocurrency market.
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Online broker Robinhood was founded in 2012, it provides investors with access to financial markets and allows them to trade stocks, ETFs, options, cryptocurrencies, and share fractions. There are no fees for trading on the platform. The company’s stock trades under the ticker HOOD on the US Nasdaq Stock Exchange at $9,23, having gained 2,1% per day, according to Investing.com.
In May, Sam Bankman-Fried, the head of crypto exchange FTX, bought a 7,6% stake in Robinhood worth $648 million. FTX later denied rumors of the broker’s takeover, noting that they are focused on cooperation.
Earlier, representatives of Robinhood announced a deal to buy a UK-based cryptocurrency company Ziglu.
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