Last Updated on January 4, 2023 by Bitfinsider

Coinbase, a publicly traded cryptocurrency exchange with operations in the US, has agreed to pay a $50 million fine to the New York State Department of Financial Services. This comes after it was found that the exchange had violated anti-money-laundering laws by allowing individuals to register accounts without conducting the requisite background checks.

To bolster its compliance program, which aims to prevent drug dealers, child pornographers, and other possible lawbreakers from opening accounts, Coinbase must also invest an additional $50 million. The terms of the Wednesday-announced settlement with the New York State Department of Financial Services must be followed by Coinbase.

The Coinbase compliance problems were first identified in 2020 during a routine examination, which was conducted after the exchange had been successful in obtaining a business license in the state of New York in 2017. The authorities found problems with the exchange’s anti-money-laundering policies that went all the way back to 2018.

In order to comply with the requirements imposed by anti-money-laundering laws, which state that the company must know the identities of its customers and keep track of their activities to look for any suspicious activity, Coinbase initially agreed to engage the services of an outside consultant to help it reorganize its daily operations. That did not, however, alleviate the corporation’s problems, and in 2021, authorities opened a more formal probe.

The superintendent of financial services for New York State, Adrienne A. Harris, asserted that Coinbase’s compliance department had fallen behind due to the company’s quick expansion and was reported as saying: “We found failures that really warranted putting in place an independent monitor rather than wait for a settlement. It is why our framework holds crypto companies to the same standard as for banks.”

The once-booming global cryptocurrency trading market has suffered yet another setback. In the past 12 months, a number of bitcoin businesses filed for bankruptcy, the most notable of which being FTX, the second-largest cryptocurrency exchange before it closed in November. Several additional senior FTX workers, including the founder Sam Bankman-Fried, are currently facing federal charges.