Key takeaways:
- The New York State Department of Financial Services (NYDFS) has imposed a $30 million fine on Robinhood’s crypto division
- According to the NYDFS, Robinhood did not adequately comply with the state’s anti-money laundering and cybersecurity regulations
- Robinhood will also have to hire an independent consultant who will thoroughly evaluate the company’s compliance measures
The New York State’s Department of Financial Services has mandated the crypto division of foremost retail investing platform Robinhood to pay a fine of $30 million.
This decision was announced by the agency in a statement on August 2.
According to the statement, the investment platform was found guilty of violating the state’s anti-money laundering and cybersecurity regulations.
The violation of the regulations was first discovered by the agency during a supervisory exam. This discovery led to an enforcement investigation during which credible evidence of the breach was found.
Further details released by the agency indicate that Robinhood’s Bank Secrecy Act and anti-money-laundering compliance programs also lacked the manpower size required for its adequate operation.
Another discovery during the investigation is that Robinhood’s cybersecurity program failed to properly address the company’s operational risks.
Other infractions discovered by the agency was that Robinhood had no dedicated phone number for its customer’s complaints.
Aside from paying the multi-million dollar fine, the company was mandated to hire an independent consultant.
The consultant will be responsible for evaluating the company’s compliance measures with the state regulator’s rules and its remediation efforts.
Speaking on the fine, Superintendent Adrienne Harris noted that the regulator will continue to investigate violations of the law.
“DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions.”
Robinhood lays off workers
Robinhood announced in a blog post that it will lay off about 23% of its workforce because of the current macroeconomic conditions.
“We will be parting ways with many incredibly talented people today in an extremely challenging macro environment,” the company’s co-founder Vlad Tenev wrote in the post.
The firm had made a smaller staff cut in April when it sacked roughly 9% of its workforce.
Tenev tied the new decision to “reduced customer trading activity and assets under custody.”
During the second quarter, the crypto market recorded an historic sell off. The value of Bitcoin and other flagship digital assets dipped to new lows as institutional investors like Tesla sold their holdings.
The move is also coming at a time when the market crash has forced other crypto-related firms like OpenSea, Coinbase, Kraken and several others to cut staff while others like Celsius, Voyager and Three Arrows Capital have gone bankrupt.
