Robinhood Crypto will pay a $30 million penalty to New York State for “significant failures” in its anti-money laundering obligations and cybersecurity compliance, according to the state’s financial services regulator.
According to Superintendent of Financial Services Adrienne A. Harris, the “significant failures” resulted in violations of the state’s virtual currency, money transmitter, transaction monitoring and cybersecurity regulations.
Under the terms of the consent decree, Robinhood cannot use insurance to cover the penalty.
“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 Harris.
DFS found that the deficiencies included inadequate staffing and insufficient resources to adequately address the compliance issues. DFS also cited critical failures in Robinhood’s cybersecurity program.
Robinhood also failed to comply with certain consumer protection requirements by not maintaining a distinct, dedicated phone number on its website for the receipt of consumer complaints, according to the state.
Under the settlement, in addition to payment of a $30 million penalty, Robinhood must retain an independent consultant that will perform a evaluation of its compliance and remediation efforts.
Robinhood yesterday announced that it is laying off about 23% of its workforce. While employees from all functions will be affected, the changes are concentrated in operations, marketing, and program management functions, according to Robinhood CEO Vlad Tenev. The move follows a 9% layoff earlier this year that he said “did not go far enough.”
“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022. In this new environment, we are operating with more staffing than appropriate,” Teney said in a company blog post.
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