U.S.-based cryptocurrency exchange Coinbase has reached a $100 million settlement with New York’s Department of Financial Services (DFS), the exchange and regulator said in statements Wednesday.
The settlement, which includes a $50 million penalty, limits the regulator’s investigation into the company’s compliance with anti-money laundering requirements.
The department found that Coinbase treated its customer onboarding requirements as a “simple check-the-box” and had failed to conduct adequate background checks, the regulator said.
“Coinbase has failed to build and maintain a viable compliance program that has kept pace with its growth. This error exposed the Coinbase platform to potential criminal activity,” said New York DFS Superintendent Adrienne Harris.
The exchange has addressed the issues, Paul Grewal, Coinbase’s chief legal officer, said in a statement.
In a blog post, Coinbase said the investigation focused on the company’s compliance program around 2018 and 2019, and the compliance backlog as the exchange grew in 2021.
“We have taken NYDFS’s concerns seriously and taken significant action to address these historical deficiencies,” the blog post reads.
Coinbase, a public company and one of the largest global crypto exchanges, will pay an additional $50 million to increase compliance efforts aimed at preventing would-be criminals from using the exchange, the company said. The deal also requires Coinbase to work with a third-party monitor.
Coinbase has come under scrutiny from the DFS and other regulators. It previously announced it had received subpoenas and requests for documents and information from the US Securities and Exchange Commission.