The crypto division of the popular trading app Robinhood has been fined $30 million by the New York State Department of Finance Services for allegedly violating cybersecurity regulations and anti-money laundering laws.
The New York State Department of Financial Services accused the trading app company of failing to use proper resources to stop illicit trading activities on the platform.
A press release on this matter notes:
“All of these deficiencies resulted from what the department found were significant shortcomings in the management and oversight of RHC’s compliance programs, including a failure to foster and maintain an adequate culture of compliance. The department also discovered that adequate resources were not devoted to RHC’s compliance programs, particularly as it grew, which exacerbated these issues.”
Robinhood is now being investigated further and will be required by the department to hire the services of an independent monetary consultant who will regularly evaluate its compliance efforts and enforce remedies when necessary.
Failing to hire and train staff
In addition to failing to prevent anti-money laundering activities, Robinhood was also accused of failing to hire and train its staff to prevent illicit financial behaviour. The department said that Robinhood did not take note of the apparent trading risks and therefore didn’t take the necessary actions to prevent illicit behaviour.
In its defence, Robinhood through its associate general counsel, Chery Crumpton said in an interview:
“We have made significant progress building industry-leading legal, compliance, and cybersecurity programs. We will continue to prioritize this work to best serve our customers. 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.”