Coinbase Agrees to Pay $100 Million to Regulators for Non-Compliant Systems

The New York Department of Financial Services (NYDFS) has announced that Coinbase has agreed to a settlement of $100 million for its compliance program. The NYDFS found significant deficiencies in Coinbase’s compliance mechanisms, including its KYC processes, transaction monitoring system, OFAC screening program, and AML risk assessments. Coinbase will pay a $50 million fine and invest an additional $50 million in improving its compliance program.

The NYDFS criticized Coinbase for its slow progress in remedying these issues, which it partly attributed to an inadequate compliance structure that was unable to meet the demands of the rapidly growing platform. The NYDFS also noted that Coinbase saw a significant increase in adoption in 2020 and 2021, with 15 times more customer sign-ups in May 2021 and 25 times more transactions in November 2021 compared to January 2020. Coinbase lacks the personnel, resources, and tools to keep up with this growth, according to the NYDFS.

Coinbase is also under investigation by the Securities and Exchange Commission for the sale of alleged securities and has received subpoenas over its listing process and various staking products.