The cryptocurrency arm of Robinhood has agreed to pay a $30 million fine to the state of New York after an investigation into its financial compliance and cybersecurity.
Robinhood Crypto, the cryptocurrency unit of the company, has agreed to pay a fine of $30 million after a New York state investigation into its financial compliance and cybersecurity. The company revealed this in its recent S-1 filing with the United States Securities and Exchange Commission (SEC).
Robinhood said it would pay the fine and engage a monitor moving forward. The investigation was launched by the New York State Department of Financial Services (NYDFS) in July 2020 after the regulator received urgent matters that needed attention, including anti-money laundering and cyber-security-related issues.
The company stated that “[Robinhood Crypto] and the [New York Department of Financial Services] had reached a settlement in principle with respect to these allegations, subject to final documentation, in connection with which, among other things, [Robinhood Crypto] expects to pay a monetary penalty of $30 million and engage a monitor.”
Robinhood first disclosed the probe from the NYDFS earlier this month, explaining to its investors that Robinhood’s crypto brokerage will need to engage a monitor and pay a fine of at least $10 million.
The brokerage company is preparing to go public soon. However, it has certain regulatory issues affecting it at the moment. In addition to the NYDFS probe, the company was also hit with a $70 million fine by the Financial Industry Regulatory Authority (FINRA) for supervisory failures in a variety of its services. This is the highest amount FINRA has levied against any firm.
Robinhood also agreed to pay $65 million to settle the US SEC. This comes after the regulator charged Robinhood for repeated misstatements that failed to disclose its receipt of payments from trading platforms for routing customer orders to them. Robinhood also failed to satisfy its duty to seek the best possible terms to execute customer orders.