Coinbase, a publicly traded crypto exchange has been served a fine by the New York State Department on Financial Services for permitting its customers to open accounts with the firm without conducting a proper investigation. To this end, the regulators have thereby issued a penalty fee of $50 million to the exchange.
According to news reports from NPR, Coinbase also reached an agreement with New York regulators to pay an additional $50 million to expand its compliance program. The New York regulators discovered that the inadequacies in Coinbase’s compliance program made it susceptible to serious criminal conduct and fraud.
The report further highlights the shortcomings in the exchange’s compliance program which include an overly simplified customer due diligence procedure, a backlog of thousands of unreviewed transaction monitoring warnings, and other questionable activities that the exchange neglected to investigate adequately were among these errors.
It is worth noting that, crypto exchanges are now being examined properly by regulators due to the recent collapse of exchanges in the industry, especially with the fallout of the bankrupt FTX.
The news also comes shortly after commercial banks were issued a warning by US regulators over risks associated with crypto assets.
Coinbase Exchange’s Role in Today’s Crypto Market
Coinbase is a regulated and licensed crypto exchange with headquarters in San Francisco, California. Along with serving as an exchange, Coinbase also provides a number of other services, such as a brokerage service for buying and selling cryptocurrencies, and a set of tools for developers to create software that runs on the Coinbase platform.
In November 2022, Coinbase announced that it was hiring new executives as part of its development plan to spread its reach across Europe. Elke Karskens was appointed as the new country director for the United Kingdom, while Patrick Elyas was appointed as the director of market expansion for Europe, the Middle East, and Africa.
While the FTX implosion was hitting hard on the digital economy, Coinbase CEO, Brian Armstrong stated that the firm is still very optimistic as the firm continues to serve its customers. The CEO stated that institutional investors are still buying digital assets, and their cryptocurrency allocation has been increasing linearly throughout the long crypto winter.
According to records on the Coinbase website, Coinbase currently has about 108 million verified users, with a quarterly trade of $159 billion, and $101 billion assets on its platform.
