Coinbase to pay $100 million to resolve New York investigation into customer due diligence lapses



Popular cryptocurrency exchange. Coinbase on Wednesday announced a deal to pay $50 million to settle. A New York investigation into its anti-money laundering and know-your-customer practices flaws.

The company said it will invest an more $50 million to improve these programs.

One of the few crypto exchanges headquartered in the United States and regulated. By state financial laws.Coinbase saw explosive. growth during . The pandemic as the price of bitcoin soared above $60,000. But by the end of 2021, according to New York regulators. Coinbase had more. Than 100,000 unreviewed. Transaction monitoring alerts and 14,000 customers requiring enhanced due diligence procedures.

“Coinbase has failed to develop and maintain an effective compliance program. That can keep pace with its growth,” Adrienne Harris. superintendent of financial services, said in a statement. “This failure has exposed. The Coinbase platform to potential criminal activity that requires. The Department to take immediate action, including . The establishment of an independent track,” he said.

The agency cited two examples of how Coinbase’s flaws led to real consequences. In one instance, a former Coinbase customer . Who was charged with crimes involving child sexual abuse material conducted suspicious . Transactions involving illegal activity on the exchange. Authorities said the activity had been going on for more.

Another customer was able to identify as an employee of an. Unnamed corporation. After gaining access to that corporation’s bank account. The customer was able to transfer $150 million of his funds to a Coinbase account. convert the funds to crypto, and deposit . the money into the customer’s personal crypto wallet. (,  discovered the activity and recovered the funds with. The help of law enforcement.)

In a statement on its website. Coinbase acknowledged the multimillion-dollar settlement and outlined other steps to address the errors.

“We see this resolution as an important. Step in our commitment to continuous improvement. our engagement with key regulators. And our efforts to achieve greater compliance for ourselves. And others in the crypto space. It said.

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