Financial Watchdog Fines Coinbase Subsidiary Over $4.5 Million for Allowing ‘High-Risk Customers’ to Buy Crypto
Britain’s Financial Conduct Authority (FCA) recently imposed a hefty fine on CB Payments Limited (CBPL), a division of Coinbase, totaling just over £3.5 million ($4.5 million). The penalty was the first such enforcement action by the regulatory body against a firm enabling cryptoasset trading.
High-Risk Customer Engagement
– CBPL allowed “high-risk customers” to purchase cryptocurrencies on Coinbase
– Engaged in e-money services and onboarded 13,416 high-risk customers
– Approx. 31% of these customers collectively deposited $24.9 million
– Transactions totaling $226 million were executed by these customers
FCA’s Response
– The FCA penalized the Coinbase subsidiary with a £3.5 million fine
– This marked the first fine of its kind by the FCA
– Therese Chambers, FCA’s joint executive director of enforcement and market oversight, highlighted the agency’s zero-tolerance policy towards such regulatory violations
– She emphasized the necessity for firms to acknowledge and address the money laundering risks associated with cryptocurrencies
Regulatory Compliance
– CBPL’s controls exhibited significant weaknesses as noted by the FCA
– The firm repeatedly breached requirements aimed at preventing money laundering activities
– This non-compliance increased the risk of criminals exploiting CBPL for illicit activities
– CBPL committed to enhancing its controls to ensure regulatory compliance, following the FCA’s findings
Coinbase’s Statement
– Coinbase, a leading digital asset exchange in the U.S., emphasized its commitment to regulatory compliance
– The platform allows users to trade a wide range of digital coins and tokens including Bitcoin, Ethereum, and USD Coin
– Coinbase continues to proactively enhance its controls to adhere to regulatory obligations, as per their official statement
Hot Take: Upholding Regulatory Compliance in the Crypto Industry
As a crypto enthusiast, staying informed about regulatory developments in the industry is crucial. The FCA’s enforcement action against CB Payments Limited serves as a reminder of the importance of robust compliance measures within the crypto space. By holding firms accountable for enabling high-risk activities, regulators aim to safeguard the integrity of the crypto market and protect investors from potential risks.
Sources:
– [FCA Announcement](https://www.fca.org.uk/news/press-releases/fca-first-enforcement-action-against-firm-enabling-cryptoasset-trading)
– [Coinbase Statement](https://www.coinbase.com/en-br/blog/coinbase-and-fca-reach-agreement-to-resolve-investigation-into-voluntary-requirement-breaches)
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