Robinhood has been going through some difficult times, and things are looking even worse as the company has now been fined a whopping $30 million by the New York State Department of Financial Services. This is the first crypto-enforcement action executed by the financial regulator, with Robinhood set to bear the brunt of such a decision.
The multi-million dollar penalty against the company was issued following investigations that showed that Robinhood violated the state’s anti-money laundering and cybersecurity regulations.
Following the hefty fine, the Financial Service Department stated that it unearthed several scenarios of the firm’s non-compliance with the state’s anti-money laundering and cybersecurity regulations.
Reports have also shown that the company’s money laundering compliance program was understaffed. More so, the company has continued to rely on its manual monitoring system, which can no longer keep up with modern challenges. The regulator also discovered some lapses with Robinhood’s cybersecurity program, adding that the company’s cyber security program doesn’t comply fully with official cybersecurity and virtual currency regulations.
While Robinhood mentioned that it complied strictly with the Department Transaction Monitoring Regulation and Cybersecurity requirements, the regulator has now revealed the company’s improperly certified compliance. It added that since Robinhood didn’t fully comply with the state’s cybersecurity rules, the company violated the law by claiming it did.
The New York regulator added that Robinhood has failed to comply with consumer protection, especially since the company doesn’t have a separate phone number dedicated to consumer complaints.
Challenging times for Robinhood
Besides being required to pay the $30 million fine, the company is expected to contract an independent consultant to determine whether or not the company has taken the right actions to address its infractions under the settlement.
Robinhood has been under tough conditions for some time now, with the company recently announcing cutting its workforce by 23% due to the crypto crash and rising inflation. This isn’t the company’s first laying off workers; it has done so twice this year.
In terms of performance, Robinhood posted a net loss of $295 million for the second quarter. It also stated that its monthly active users declined by 1.9 million.