The redemption of success? – In the madness of the previous bull run, Coin basis he was overwhelmed by the number of new signups on his platform. Caught between the wild growth of its user base and stricter regulation, the exchange lacked rigor. And for the most regulated exchangeit is a serious fault directly sanctioned by the government authorities.
A hefty fine for Coinbase
$100 million of plum. It is likely that the Colossus Coinbase he won’t get caught twice. the New York State Department of Financial Services (NYDFS) has sanctioned the publicly traded company since May 2021. And it hasn’t gone with the back of the spoon. $50M Fine and $50M Mandatory Investment for Coinbase to Strengthen its Compliance Program. This is to comply with anti-money laundering regulations.
This is the agreement that has been reached between the cryptocurrency giant and the US agency in order to close the dispute. A dispute arising from cracking of the exchange into identity verification of its users and in yours alert system on some transactions, mainly on the years 2020 and 2021 which marked the beginning of Bitcoin’s latest bull run.
“Coinbase lacked the staff, resources and tools to keep up with these various alerts which have grown to unmanageable levels for the company. »
Extract from the agreement
At the end of 2021, it was even more than 100,000 transaction alerts not studied and more than 14,000 ID verifications late. Coinbase has what is called a bitlicense provided by NYDFS. It is one of more difficult financial licenses in terms of cryptocurrency regulation in the United States. This license has led to a deeper study of Coinbase’s activities. And the discovery of an incident in early 2021 plunged the crypto giant’s $100 million fine today.
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The Exchange’s $150 Million Mistake
The story then begins in early 2021. A smart guy named Jean-Claude manages to create a Coinbase account in the name of a company by posing as one of its employees. The name of the latter is not specified in the report. Without the appropriate supporting documents, the maneuver is normally impossible, but Jean-Claude succeeds. In parallel thecrook he also manages to access the real bank account of the company in question and increases the withdrawal limit by a factor of 50.
Neither one nor two, transfer all funds from bank account, ie $150 million on Coinbase and turns them into cryptocurrencies. Then, he sends them to one of his private wallets. And the case is in the bag. Coinbase remained unaware of the story for the next 6 days until the defrauded bank contacted them. Jean-Claude is finally found and the company manages to recover his Dusse.
Coinbase’s goal is clear. The compliance remains the password. The cryptocurrency giant has announced plans to stay as close to regulatory bodies as possible. Furthermore, he wants to be blameless, a model of compliance in the cryptocurrency world, to maintain the trust of its customers. Shares of Coinbase also dropped 9% after this announcement.
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