Coinbase: The cryptocurrency exchange site Coinbase had a sharp increase on Wednesday.
Following a $100 million settlement with the New York Department of Financial Services, the exchange’s stock price rose.
Following the agreement, COIN, which is listed on the Nasdaq Composite, was up more than 12% and was trading at $37.34 per share.
The settlement
Issues with the company’s compliance programs were settled between the company and the New York Department of Financial Services.
The cryptocurrency exchange must therefore pay a $50 million fine as a result.
Coinbase must also invest an additional $50 million to improve its capacity to adhere to financial regulations, such as transaction monitoring and KYC requirements.
The New York Banking Law and state rules surrounding the following were broken by the company, according to the Department of Financial Services, which said it failed to comply with a program.
- Cybersecurity
- Money transmitting
- Transaction monitoring
- Virtual currencies
Company vulnerability
The NYDFS claimed that Coinbase’s compliance program had issues that left it open to the following risks:
- Activities related to narcotics trafficking or child sexual abuse material
- Fraud
- Money laundering
The Superintendent of Financial Services, Adrienne A. Harris, stated:
“It is critical that all financial institutions safeguard their systems from bad actors.”
“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.”
The NYDFS asserted that the business has already begun to enhance its practices.
KYC
Coinbase’s treatment of the KYC rule and customer due diligence requirements was deemed by New York regulators to be a “check-the-box” activity.
The exercise was also deemed to be insufficient.
The department also learned the company has a sizable backlog for keeping an eye on suspicious transactions.
By the end of 2021, there were more than 100,000 unreviewed alerts.
As a result, some of the transactions that Coinbase highlighted weren’t examined for several months.
The NYDFS installed an independent monitor at the beginning of 2022 as a result of the company’s failure.
In order to resolve concerns with the company’s procedures, the monitor assessed the company’s compliance program.
The monitor will continue to work with Coinbase for an additional year as part of the settlement.
Read also: Jon Tester, US Senator, still dismissive of crypto
Price jump
Investors who now have a good understanding of the company’s regulatory issues are likely to have contributed to the surge in Coinbase stock’s (COIN) price.
The NYDFS inquiry was first mentioned by the cryptocurrency exchange platform in a late 2021 SEC report as a potential risk to its business operations.
But the regulator’s most recent statement effectively put an end to the matter.
SEC investigation
Despite the good news, an SEC inquiry against Coinbase is still imminent.
A probe into whether the SEC should permit Americans to trade digital assets that ought to have been registered as securities was launched against the corporation in July 2022.
A past insider trading case involving a former Coinbase employee who was suspected of breaking the company’s insider trading policies provides the basis for the current investigation.
The former worker allegedly told his brother and a friend about impending token listings, according to the accusation.
The agency discovered that the accused traded the following tokens:
- AMP (AMP)
- Rally (RLLY)
- DerivaDEX (DDX)
- XYO (XYO)
- Rari Governance Token (RGT)
- LCX (LCX)
- Powerledger (POWR)
- DFX Finance (DFC)
- Kromatika (KROM)
Coinbase
In April 2021, the exchange platform for cryptocurrencies first went public.
It joined the US stock exchange as the country’s first significant cryptocurrency startup.
At the time, the cryptocurrency market was booming, with trades for Bitcoin reaching $63,000.
People consequently developed an interest in investing in cryptocurrencies.
COIN made its debut for an incredible $381, which was 52% more expensive than its $250 reference price.
But a sudden crypto and stock market collapse occurred in 2022.
Crypto ventures, businesses, and almost every coin’s price on the market were decimated by the severe bear market.
Since that time, COIN’s value has decreased considerably, plummeting 90% from the time it was first launched.
References:
Coinbase stock price jumps 12% following $100M NYDSF settlement
Coinbase reaches $100 million settlement with New York regulator over compliance programs
SEC launches probe into Coinbase over alleged securities listing: report
SEC claims Coinbase currently lists nine crypto assets that are securities
