Robinhood's Crypto Arm to Pay $30 Million for Consumer Protection, Other Violations
The fine is the latest in a series of lawsuits and alleged violations against the investing app.
Robinhood supports a handful of cryptocurrencies, including bitcoin, ethereum, dogecoin and litecoin.
Robinhood Crypto, the cryptocurrency trading unit of the popular investing app, was hit with a $30 million fine from the New York State Department of Financial Services for "significant" failures to comply with the state's anti-money laundering, consumer protection and cybersecurity measures.
The department, which regulates financial services and products in the state, said in a press release Tuesday that Robinhood Crypto failed to adequately staff their bank secrecy act/anti-money laundering program, and that the program didn't have enough resources to address the risks that consumers face using its services. The department also said the company's cybersecurity program wasn't in full compliance with state regulations.
On top of that, the Department of Financial Services said the company failed to offer "a distinct, dedicated phone number on its website" for receiving consumer complaints.
This is the department's first crypto enforcement action, according to The Wall Street Journal. Robinhood previously said it expected to pay the $30 million fine to the NYDFS last year after a 2020 investigation "focused primarily on anti-money laundering and cybersecurity-related issues" found the company to be in violation of several requirements.
In addition to the $30 million fine, Robinhood will be required to retain an independent consultant to perform a comprehensive evaluation of Robinhood Crypto's compliance and remediation efforts in regard to its violations.
This isn't the first time Robinhood has faced fines or legal action for allegedly misleading consumers. In June, the nonprofit Financial Industry Regulatory Authority hit Robinhood with a $70 million fine, its largest fine ever, for misleading consumers and failing to report customer complaints. In early 2021, Robinhood faced regulatory scrutiny after it restricted users' ability to buy stock in GameStop, citing "market volatility."
Robinhood didn't immediately respond to a request for comment.