The crypto exchange platform Coinbase agreed Wednesday to pay US$100 million to settle charges levied by the New York State Department of Financial Services (DFS) after it was found to have violated anti-money-laundering laws and not be up to code in managing its security protocols.
Coinbase will pay $100 million as part of its agreement with New York regulators following reports that the company was highly at risk of being exploited by criminal activity. (Photo: Marco Verch Professional Photographer, Flickr, License)Half of that some are settlement fees and the other half self-funded investments for the company’s security features to prevent future instances of criminal exploitation.
Founded in 2012, the platform’s user base has since ballooned to over 108 million customers worldwide. Its cybersecurity and transaction monitoring capabilities, however, have not managed to keep up with the demands that come with such growth, leading to the DFS to launch an investigation in 2021 after several security concerns came to light.
The DFS report shows that, by the end of 2021, Coinbase had become overwhelmed by a “substantial backlog of unreviewed transaction monitoring alerts, exposing its platform to risk of exploitation by criminals and other bad actors.”
This backlog prevented the platform from carrying out anti-money laundering and customer due diligence protocols, as required by federal and New York state law.
“Coinbase failed to build and maintain a functional…
