The crypto section of the popular trading app Robinhood $30 million slapped A fine in New York after the company allegedly violated cybersecurity regulations and anti-money laundering laws. The penalty was issued by the New York State Department of Financial Services, which accused the company of failing to use appropriate resources to stop illicit trading activity on its platform.
Robinhood landed in hot water
A press release related to the matter stated that Robinhood was using transaction monitoring protocols that had “significant shortcomings.” The company is now under further investigation. The press release went on to say:
All of these deficiencies resulted from management’s finding of significant deficiencies in the management and oversight of the reproductive health center’s compliance programmes, including a failure to promote and maintain an appropriate compliance culture. The department also discovered that adequate resources were not allocated to the reproductive health center’s compliance programs, especially as they grew, exacerbating these issues.
In addition to poor grades in the anti-money laundering division, Robinhood is also accused of failing to recruit and train its own staff to prevent illicit financial behaviour. The Department of Financial Services says Robinhood did not take into account all the trading risks that were present, and therefore did not act with sufficient perseverance and force.
Robinhood, of course, says it has done nothing wrong and, in contrast, has worked hard to ensure that all financial compliance measures are robust and enforceable. Sherry Crompton – the company’s assistant general counsel – explained in an interview:
We’ve made significant progress in building industry-leading legal, compliance, and cybersecurity programs. We will continue to prioritize this business to provide the best service to our customers. We remain proud to offer a low-cost and accessible cryptocurrency buying platform, and are excited to continue to grow our business in a responsible manner with new products and services that our customers want.
Robinhood was somewhat of a controversial trading company after an incident in early 2021. During the first month of that year, crypto assets such as Bitcoin and Dogecoin, along with many stocks, were rising at a rapid pace, which meant that everyone wanted to get in. at work. Robinhood intervened and halted all trading, claiming it was doing so to protect traders from potential scam or other illegal behaviour.
What will the company do?
Many customers did not take well to maneuver and I started a class action lawsuit Against the company, they alleged that executives prevented them from participating in serious investment opportunities. Not long ago, Robinhood also announced plans to lay off up to 23 percent of its workforce.
In addition to the fine, the department will now require Robinhood to hire the services of an independent monetary advisor who regularly evaluates the company’s compliance efforts and enforces remedies when necessary.
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