Robinhood crypto arm fined 30 million dollars
The New York State Department of Financial Services fined Robinhood‘s crypto arm $30 million after it was accused of breaching AML, and cyber-related laws.
The NY State Department of Financial Services. Has accused the trading app firm of not taking proper measures to halt illegal trading activities on its platform.
The Robinhood crypto division also allegedly didn’t have adequate anti-money laundering policies and procedures in place.
The fine is the latest in a string of bad news for Robinhood. Which has been suffering from outages and customer service issues in recent months.
A handout on this matter notes:
“All of those shortcomings were caused by RHC’s ineffective compliance management and oversight, which included a failure to develop and maintain an adequate culture of compliance. In addition, the department found that adequate resources weren’t devoted to RHC’s compliance programs as it expanded, exacerbating the situation.”
Robinhood is presently under investigation, with the possibility that it may be required to hire an independent monetary expert. Who will assess the company’s compliance efforts regularly and enforce remedies as needed.
This news comes as Robinhood is facing increasing scrutiny from lawmakers. And therefore the public following a series of high-profile outages and customer account issues.
Earlier this month, Robinhood was hit with two class-action suit lawsuits alleging that the company violated federal securities laws. And last week, Robinhood was accused by NY regulators of failing to adequately disclose its relationship with market maker Citadel.
Robinhood has denied any wrongdoing and has vowed to cooperate with the regulatory investigation. But the firm is feeling the pressure and is now taking steps to improve its customer service and communication.
Failing to recruit and train employees
It was also accused of failing to prevent anti-money laundering activities, as well as other problems. Robinhood was also charged with neglecting to recruit and educate its staff to avoid unlawful financial conduct.
According to the agency, Robinhood failed to recognize the apparent trading risks. As a result, it was unable to take appropriate measures to prevent unlawful conduct.
Robinhood’s customer service is additionally under scrutiny. After the death of Alexander Kearns, a 20-year-old university student who took his own life. After seeing a negative balance of $730,000 in his Robinhood account.
It was revealed that the company had no phone support for customers. In light of this, Robinhood has stated that they’re going to be rolling out 24/7 phone support for Robinhood Gold subscribers; immediately after the incident.
In its defense, Robinhood through its associate general counsel, Chery Crumpton says in an interview:
“We’re making excellent progress constructing world-class legal, compliance and cybersecurity programs. We’ll keep on devoting effort to this work so we can serve our customers better. We’re still proud to offer a more affordable, user-friendly platform for buying and selling cryptocurrency, and we look forward to continuing responsible growth with new products and services that our customers request.”
Based in Menlo Park, California, Robinhood is a financial services firm that offers a mobile app and website for users. To invest in ETFs, stocks, options and cryptocurrencies. In February 2018, the company launched its commission-free trading platform for cryptocurrencies.
Robinhood crypto division was recently slammed with a $30 million fine, for allegedly violating cybersecurity regulations and anti-money laundering laws.
The Robinhood app has been criticized for its simplistic interface. Which doesn’t provide enough information to assist users to make informed investment decisions.
The company has also been criticized for frequent outages, and for not being transparent enough about how it makes money.
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