Coinbase Stock Surges After $100 Million Settlement With Regulators - MarketWatch

Coinbase Stock Surges After $100 Million Settlement With Regulators - MarketWatch
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      Coinbase and other crypto companies continue to face regulatory pressures.

        David Myslivec/Dreamstime.com































   <p>
    Coinbase Global
   agreed to a $100 million settlement with the New York Department of Financial Services over failures in the cryptocurrency broker’s compliance program.</p> <p>Shares in Coinbase (ticker: COIN) gained about 11% after the open as investors reacted to the news, which removes some regulatory uncertainty overhanging one of the few publicly-listed firms in the turbulent crypto industry. </p>

   <p>Coinbase agreed to pay the New York Department of Financial Services (NYDFS) a $50 million penalty and invest a further $50 million over two years to bolster compliance operations. The NYDFS said it found Coinbase had wide-ranging and longstanding failures in its compliance program, which violated New York financial law. Issues in its anti-money-laundering program included customer due diligence, transaction monitoring, suspicious activity reporting, and others, the department said.</p> <p>“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity,” Superintendent of Financial Services Adrienne A. Harris said. “The Department’s expectations with respect to consumer protection, cybersecurity, and anti-money laundering programs are just as stringent for cryptocurrency companies as they are for traditional financial services institutions.”</p> <p>The company said that the NYDFS investigation pertained to its 2018-2019 compliance program and the backlogs that grew alongside its growth in 2021 when Coinbase went public in the heat of 
    Bitcoin
  ‘s huge run-up. </p> <p>“Coinbase has taken substantial measures to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance,” Paul Grewal, Coinbase’s chief legal officer, said. “We believe our investment in compliance outpaces every other crypto exchange anywhere in the world, and that our customers can feel safe and protected while using our platforms.”</p> <p>Coinbase disclosed in its 2021 annual filing that the NYDFS was investigating the company, so the news on Wednesday has removed some uncertainty for investors over the outcome—explaining the move in Coinbase’s stock price. But it doesn’t clear away the regulatory concerns hanging over the leading American crypto trading platform. </p> <p>The company disclosed last year that the U.S. Securities and Exchange Commission has investigated it, including over how it lists assets. Coinbase has maintained that it doesn’t list unregistered securities on its trading platform and that it continues to work with regulators.</p> <p>Write to Jack Denton at [email protected]</p>