This month, Robinhood’s crypto division was levied with a $30 million fine by New York state for violating laws around cybersecurity, money-laundering and consumer protection.
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Regulators said the company violated multiple regulations, including rules pertaining to virtual currencies, money transmission, transaction monitoring, and cybersecurity. The company is now required to hire an independent consultant to investigate and scrutinize any deficiencies in Robinhood’s compliance with New York state regulations.
“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,” said the Department of Financial Services Superintendent Harris.
State regulators faulted Robinhood for poor staffing in its units fighting money laundering and bank secrecy, and said that the firm did not mobilize resources to counter risks, including operational risks related to virtual currencies. Robinhood also failed to beef up its cybersecurity program.
The news comes as Robinhood fired almost a quarter of its workforce during recent market turmoil that saw a 44% drop in revenue.
“We have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash,” CEO Vlad Tenev said in an announcement. “This has further reduced customer trading activity and assets under custody.”
That does not mean that Robinhood has slowed down on the crypto front. Last week, Robinhood unveiled support for popular altcoins Avalanche and Stellar. Both of the tokens saw their price spike as the company said it was listing the digital currencies.
Earlier this spring, crypto billionaire and FTX CEO Sam Bankman-Fried divulged that he had taken a 7.6% stake in the company, prompting rumors that he was looking to buy the popular trading platform.
