Coinbase has agreed to a $100 million settlement with New York State following an investigation into its compliance program.
The New York Department of Financial Services (NYDFS) announced the settlement Wednesday (Jan. 4), saying the crypto exchange would pay the state a $50 million penalty for “significant failures in its compliance program.”
“These failures made the Coinbase platform vulnerable to serious criminal conduct, including, among other things, examples of fraud, possible money laundering, suspected child sexual abuse material-related activity, and potential narcotics trafficking,” the NYDFS said.
Coinbase has also agreed to invest $50 million in its compliance function over the next two years and to enhance its compliance program in accordance with a plan approved by the department, the announcement said.
In a statement on its website, Coinbase called the settlement “a critical step in our commitment to continuous improvement, our engagement with key regulators, and our push for greater compliance in the crypto space — for ourselves and others.”
According to the NYFDS, the agency’s investigation found that Coinbase’s Know Your Customer and Customer Due Diligence (KYC/CDD) program “was immature and inadequate,” with the company treating customer onboarding “as a simple check-the-box exercise and failed to conduct appropriate due diligence.”
The investigation also found that Coinbase could not keep up with the growth in the…
