- Robinhood's crypto division was hit with a $30 million fine from the New York Department of Financial Services.
- Regulators said the unit didn't have sufficient anti-money-laundering and cybersecurity programs.
Robinhood's crypto trading unit was hit with a $30 million fine from the New York State Department of Financial Services on Tuesday, as the crypto unit of the popular retail-trading platform failed to implement proper security and money-laundering prevention, regulators said.
"As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance," Superintendent Andrienne Harris said in a statement, adding that the trading app violated several of the NYDFS' anti-money-laundering and cybersecurity regulations.
Regulators said the crypto unit didn't have enough staff members or resources, and didn't monitor transactions on a scale or timeline that was appropriate for Robinhood's growth in the past few years.
The department also said the platform's security measures "did not fully address [the unit's] operational risks," and criticized its website for not listing a phone number for customer complaints, which is a requirement under consumer protection laws.
The charges are the department's first enforcement action related to crypto, according to the Wall Street Journal. The action comes amid a difficult year for crypto, not only with regard to steep losses that have sent some firms into bankruptcy, but also stemming from a series of large scale hacks that have swiped billions of dollars from customers and investors in 2022.
Robinhood has been expecting these fines for over a year. The company disclosed in 2021 that the state regulator was conducting an investigation on its crypto unit, and settled for a fine of at least $10 million then.
In 2020, the trading app also forked over $65 million to the Securities and Exchange Commission for providing misleading information to customers, and last year, was it was slapped with a $70 million fine from the Financial Industry Regulatory Authority for harming customers with insufficient trading supervision.
As part of its settlement with NYDFS, Robinhood agreed to be monitored by an independent agent for future compliance with state regulations.