NY ‘fines’ Robinhood Crypto $30m for skirting regulations
Robinhood cuts 23% of its workforce
NEW YORK, Aug 3, (AP): The crypto division of the online brokerage Robinhood will pay a $30 million penalty to New York state for failing to comply with regulations governing money laundering and cybersecurity, the state’s Department of Financial Services announced Tuesday.
The department said an examination of Robinhood Crypto’s operations from Jan. 24, 2019, through Sept. 30, 2019, found that the company’s compliance with banking regulations had not kept up with its growth.
“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,” Adrienne A. Harris, superintendent of the state’s Department of Financial Services, said in a news release.
Department of Financial Services officials said Robinhood
Crypto improperly certified to the state that it was in compliance with transaction-monitoring and cybersecurity regulations despite its deficiencies in those areas. Additionally, the officials said, the company failed to provide a dedicated phone number for consumer complaints on its website, as is required.
In addition to paying the $30 million penalty, Robinhood Crypto will be required to retain an independent consultant who will evaluate the company’s regulatory compliance, the officials said.
Meanwhile, Robinhood Markets said Tuesday it’s cutting nearly a quarter of its workforce, as crashing cryptocurrency prices and a turbulent stock market keep more customers off its trading app.
CEO Vlad Tenev said the company, whose easy-to-use app helped bring a new generation of investors to the market, will reduce its headcount by about 23%. The reduction of about 780 jobs follows another round of layoffs announced earlier this year, which cut 9% of its workforce and “did not go far enough” in cutting costs, Tenev said in a post on the company’s blog.