The cryptocurrency division of Robinhood has been slapped with a $30 million penalty by New York’s Department of Financial Services for significant violations of cybersecurity and money laundering regulations.
The $30 million penalty, announced late Tuesday via a consent order, adds to a litany of problems at Robinhood that range from security breaches, to ongoing layoffs, to a massive crash in its public market valuation.
According to a statement from the Department of Financial Services in New York, 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.”
“The Department found critical failures in [Robinhood Crypto’s] cybersecurity program. The program did not fully address RHC’s operational risks, and specific policies within the program were not in full compliance with several provisions of the Department’s Cybersecurity and Virtual Currency Regulations.”
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The department also outlined “significant deficiencies” in Robinhood’s compliance program and transaction monitoring system, noting that they were inadequately staffed and did not have sufficient resources to adequately address risks specific to Robinhood Crypto.
Robinhood Crypto was also criticized for improperly certifying to the New York authorities that its transaction-monitoring and cybersecurity regulations were in compliance despite the violations and deficiencies.
In addition, the state said Robinhood Crypto did not publicly provide a dedicated phone number to field complaints from customers, in violation of the rules.
In addition to the $30 million penalty, the company will also be required, as part of the settlement, to retain an independent consultant for a comprehensive evaluation of Robinhood Crypto’s compliance with the regulations and fixing the identified deficiencies and violations.
In September 2021, Robinhood fessed up to a security breach that exposed names and email addresses for millions of users of its stock trading platform.
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