Robinhood expects $ 30 million fine in Crypto Arm money laundering investigation



Robinhood Markets Inc.’s cryptocurrency arm expects to pay a $ 30 million fine to settle a New York State investigation into its cybersecurity and anti-money laundering practices, said Monday the mobile investment company in regulatory documents, a large increase from a previous estimate. of the potential penalty.

Robinhood said in documents revised for a public list that its crypto unit, Robinhood Crypto LLC, anticipates payment under a proposed deal to end an investigation by financial regulators into allegedly lax security procedures.

“[Robinhood Crypto] and the [New York Department of Financial Services] reached a tentative settlement regarding these allegations, subject to final documentation, on which, among others, [Robinhood Crypto] expects to pay a $ 30 million fine and hire a monitor, ”the company said.

Robinhood, based in Menlo Park, Calif., First revealed the investigation earlier this month when it filed documents to be made public. The company told investors at the time that a proposed settlement with the New York Department of Financial Services would require Robinhood’s crypto brokerage firm to hire a monitor and pay a fine of at least $ 10 million. .

A Robinhood spokesperson declined to comment. A representative for the NYDFS said the investigation was ongoing and declined to comment further.

In its first publicly available documents, Robinhood said that New York regulators alleged “certain shortcomings in our policies and procedures regarding risk assessment, the lack of an adequate response to incidents and a lack of adequate response to incidents. business continuity plan, and security gaps in the development of our applications “. The company shared a few other details.

NYDFS requires financial companies to have anti-money laundering programs that include collecting basic customer data, responding to law enforcement inquiries, and evaluating transactions for risks such as sanctions violations. The agency also requires companies to maintain cyber defenses and contingency plans in the event of a hack.

State and federal regulators have stepped up their scrutiny of cyber protections for private critical infrastructure, such as financial services companies, as foreign intelligence agencies and hacking groups target more U.S. companies.

At the same time, U.S. officials are increasingly monitoring crypto transactions, many of which go through foreign exchanges, in hopes of spotting criminal activity such as tax evasion or digital ransom payments.

Robinhood expects its initial public offering to value the company, which has exploded as retail investors pumped money into the markets, to around $ 33 billion.

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Write to David Uberti at [email protected]

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