Robinhood Crypto Exchange is facing regulatory scrutiny over its alleged infractions. The New York State Department of Financial Services (DFS) has revealed that the exchange is guilty of non-compliance with regulations.
The DFS, the embattled crypto exchange, is guilty of “significant failures” in different aspects of its operations. The exchange fails in the bank secrecy act, anti-money laundering (BCA/AML), and cybersecurity breaches.
Robinhood is Ready to Pay the $30 Million Fines
According to reports, the DFS announced Tuesday that the exchange, Robinhood Crypto LLC, will pay $30 million as a penalty. As a result, the fine will be paid to the state of New York to settle the charges against the exchange.
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Adrienne A. Harris, Superintendent of Financial Services of DFS, revealed that Robinhood has failed to abide by the regulations. Harris added that the exchange also did not invest in the right resources as its business expanded. It is required for crypto exchanges to maintain compliance by upgrading their official requirements.
Accordingly, the failure of Robinhood to heed the rules is regarded as a violation of existing rules against money laundering and cybersecurity.
Moreover, the department considers all the shortcomings significant in the management and control of service providers. Further, an announcement from the state’s regulator indicates that Robinhood has decided to discontinue the culture of compliance entrenched in all crypto exchanges in New York.
Meanwhile, aside from the $30 million fine, the exchange is required to hire an independent consultant. The consultant is to undertake the task of carrying out a holistic review of the exchange’s compliance with the regulator.
Robinhood’s License Application
The Department of Financial Services first approved Robinhood’s application for a license in January 2019, preparatory to its operation. At the time, the exchange sought to offer digital financial services in New York by buying, selling, and storing cryptocurrencies.
Robinhood offered services in only seven digital tokens, including Ether, Bitcoin, Litecoin, and Bitcoin Cash. The popular crypto exchange offers commission-free trading involving cryptocurrency. It also buys and sells other major digital tokens like Ethereum, Bitcoin, Chainlink, DOGE, Litecoin, and others.
Robinhood offers multiple investment options where users can invest funds using a brokerage account. In addition, various assets are available to investors who want to leverage flexible investment products.
The platform offers truly discounted offerings for investors, even though it is yet to be as big as other brokerage offers. It is attractive because its cost is among the lowest the industry offers, and users can get this from options trading.
Its mobile application is user-friendly and easy to navigate; even first-time users can access it. A stock trading option is located on the app interface’s first page, requiring next to no effort to locate.
Despite its supposed features, the platform has come under criticism due to some untimely bugs and trade restrictions. Regulators have previously fined the exchange for providing misleading trading information to investors.