Robinhood Markets’ cryptocurrency division was fined $30 million by New York State financial regulators after the online trading platform was accused of violating bank secrecy and anti-money laundering obligations, according to a report filed this morning.
As part of the settlement, Robinhood will be required to hire an independent consultant to carry out an evaluation of the company’s compliance with the New York State Department of Financial Services’ regulations and remedy any errors that are found.
Robinhood Crypto’s “significant failures” according to the state of New York include inadequately staffing a cybersecurity program within the company, not allocating sufficient resources to address cybersecurity risks, and not transitioning from a manual transaction monitoring system to one the state requires for a company of Robinhood’s size in time.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” Adrienne Harris, superintendent of financial services for NYDFS, said in an announcement.
Today’s penalty is not the first time that Robinhood has been ordered to pay financial regulatory authorities. Last year, the company was ordered to pay $70 million in a settlement that alleged a series of issues, including service outages and sharing false or misleading information to customers. This marked the largest penalty ever issued by the Financial Industry Regulatory Authority.
Despite the allegations and fines from NYDFS, Robinhood says it is pleased with the progress it has made since addressing fines from last year.
“We have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers,” said Cheryl Crumpton, associate general counsel of litigation and regulatory enforcement at Robinhood, in a statement to Fast Company. “We remain proud to offer a more accessible, lower-cost platform to buy and sell crypto and are excited to continue to grow our business in a responsible manner with new products and services that our customers want.”
Wall Street seemed to agree. As of midday, Robinhood’s stock was up about 1%, trading at around $9 a share.