Robinhood Crypto Arm Charged $30M For AML Violations


The crypto arm of American financial brokerage company, Robinhood has been charged with a $30 million fine by the New York State Department of Financial Services (NYDFS). According to the financial security watchdog, Robinhood Crypto LLC. has been involved in a couple of anti-money laundering (AML) schemes and violations of scripted crypto regulations.

This is yet another attempt by the NYDFS is enforcing such actions on a crypto-inclined institution. Most of its regulations involve other financial organizations and insurance agencies. Robinhood on its part has been asked to pay a series of fines due to the mode of its operations.

Robinhood Crypto Arm Pays Series of Fine

In December 2020, the crypto firm agreed to pay $65 million as charges to the Securities and Exchange Commission (SEC). It was discovered that the California-based brokerage firm misled clients about the revenue generated from its trades and the quality of its services.

Based on a statement by SEC, “Robinhood marketed its trades as commission-free and matching or exceeding its peers in quality, the brokerage provided inferior trade prices that cost clients tens of millions of dollars.”

About six months after, a private American corporation Financial Industry Regulatory Authority (FINRA) hit Robinhood with a $75 million fine. About $57 million was paid to the regulator while over $12.6 million was distributed to the affected customers as reimbursement.

The brokerage misled millions of customers, approved ineligible traders for risky strategies, and didn’t supervise technology that locked millions out of trading. This was one of the largest fines which had been charged in the history of FINRA.

Meanwhile, Robinhood has been under NYDFS’s radar since 2020 when the regulator first became suspicious of its activities. Apart from cybersecurity issues, the brokerage firm has many other illicit operations going on. The firm has not met its virtual currency requirements, nor has it provided a business continuity plan.

Security and financial watchdogs have upscaled their game even as more crypto firms have been discovered to fall short of the standard. Recently, the U.S. SEC charged eleven individuals for the Forsage $300 million pyramid Ponzi hack. Also, to guide consumers, SEC updated its list of misleading crypto companies.

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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