Robinhood’s Crypto Unit Faces $10M Penalty Over Money Laundering Violations

Sunil Sharma
July 7, 2021
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CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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“Robinhood Crypto” the cryptocurrency brokerage unit of trading app Robinhood is facing a $10 Million penalty by New York regulators. Robinhood Crypto is penalized for allegedly violating state rules on cybersecurity and anti-money laundering.

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Robinhood Unable to Get Over GME & Dogecoin (DOGE) Saga

In January 2021, GameStop (GME) stock suffered a short squeeze primarily driven by a reddit group called Wallstreet aimed to bleed hedge fund and institutional short sellers. This group majorly consists of retail investors and Robinhood was one among key platforms where trading volumes were broke all time highs.

Similarly, following endorsements from Elon Musk retail interest in cryptocurrency Dogecoin (DOGE) spiked and reached an all time high price of $0.73. Dogecoin trading volume at Robinhood were off the charts as Dogecoin entered top 5 cryptocurrencies.

Source: Coinmarketcap

During the period Robinhood suffered several technical glitches and also halted crypto deposits. Traders were specifically barred from trading in Dogecoin (DOGE) at several occasions. This soon caught regulator attention and Robinhood was charged whooping $70 Million for technical outages and missteps related to options trading.

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Regulations to Tighten Up Amid Rising Criminal Hacking

The final penalty amount may well exceed $15 Million and Robinhood may face tougher cybersecurity guidelines moving ahead. In its regulatory filing with SEC Robinhood said,

“certain deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in our application development security,”

Last week Robinhood warned users about cyberattacks and informed that its bottom line might be affected. Also Robinhood user accounts were compromised last year and since then SEC, the Financial Industry Regulatory Authority and New York state are all investigating Robinhood.

The regulatory concerns are also a direct result of hacks of colonial pipeline and meatpacker JBS SA,  the incidents that disrupted US supply chains. The rising threat of criminal hacks and cryptocurrency ransoms is leading to more strict and tougher cyber compliance for companies like Robinhood.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO's in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on X at @sharmasunil8114 and reach out to him at sunil (at) coingape.com
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.