New York Department of Financial Services (NYDFS) has sanctioned Coinbase for failing to keep track of the increase of its customers and database records during the bull season.
Coinbase has been fined a total of $100 million by New York officials in recompense for its defiance.
Coinbase Receives Sanction From NYDFS
Coinbase was fined $100 million for defaulting in maintaining its compliance policy towards its customers.
This $100 million fine was divided into half, with $50 million going to the NYDFS and the other half going into the compliance program.
The $50 million fine invested into the compliance program comes after authorities complained about some flaws uncovered in Coinbase’s review of user identities and transaction notifications.
It was also mentioned that Coinbase failed to fulfill its obligation to track the development and growth of its customer base from 2020 to 2021.
The NYDFS stated that Coinbase lacked the facilities and resources required to keep up with the increase, transaction notifications in its platform leaving gaps in its records.
Furthermore, by the end of 2021, the corporation had a pile of unfiltered and unreviewed client transaction notifications, as well as a backlog of over 12,000 customers requiring due diligence.
Coinbase In Operation Since 2017
Coinbase obtained a license to operate in 2017, This was obtained during a year when crypto rules were strict, before they were finally softened in later years.
Coinbase, however, attempted to address some of the flaws that were raised on its platform. In 2022, it hired a private monitor to handle backlogs and transaction notifications, but this did not seem to please the NYDFS, as they still pointed out certain flaws in the system.
The United States Securities and Exchange Commission had also submitted a report on this same issue with the Coinbase firm.
The SEC’s Chief Legal Officer stated that Coinbase has since taken strict measures to resolve these issues in its firm and is also highly devoted to becoming a mentor and laying a good trail for other developing industries in the crypto field to follow and imitate.
Its ideals and beliefs extend to cooperating with authorities when concerns of customer interest and compliance emerge.
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