Coinbase (COIN) will pay a $50 million fine to the New York State Department of Financial Services (NYDFS) to settle charges that allowed users to open accounts without conducting proper background checks. Regulators found that the cryptocurrency exchange’s policies violated anti-money laundering laws.
The deal will also require Coinbase to invest $50 million over the next two years to strengthen its compliance program.
“Coinbase was unable to build and maintain a functional compliance program that could keep pace with its growth.” Financial Services Superintendent Adrienne A. Harris wrote in a press release.
Coinbase had been licensed to operate a virtual currency and money transfer business in New York City since 2017, after the NYDFS discovered flaws in Coinbase’s Know Your Customer (KYC) and transaction tracking policies. The regulator set up an independent monitor in early 2022 to work with Coinbase to resolve the issues.