Robinhood Crypto will be forced to pay one fine of 30 million dollars to appease regulators. A penalty that is added to those already applied to the company, which thus finds itself having to pay over 100 million dollars for its behavior.
Robinhood Crypto fined by New York regulator
Just yesterday, the New York State Department of Financial Services ordered Robinhood Crypto to pay the $ 30 million fine. And he accused the company of committing “significant violations of money laundering, cyber security and consumer protection”. A tough sanction, which represents just the umpteenth action of the regulators against the company. This time, NYDFS investigators say Robinhood has failed to maintain effective and compliant cybersecurity programs. The agency found “critical failures” in the computer security program of the company, which apparently has not fully addressed the “operational risks”. Precisely for this reason, in addition to the fine, the company will have to hire an independent consultant who will perform an assessment to determine the company’s compliance in the future.
“As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance. A failure that led to significant violations of the Department’s anti-money laundering and cyber security regulations, ”he said Adrienne A. Harris of the NYDFS agency. Unfortunately, the New York regulator’s fine was just the start of Robinhood’s woes this week. The CEO Vlad Tenev announced that the company it was cutting about 23% of its workforce as part of a larger reorganization. The layoffs come about three months after Robinhood announced it would move to 9% of its staff after a pandemic-fueled period of “hypergrowth”. But Tenev’s actions don’t seem to have been enough.
The CEO said rising inflation, coupled with the collapse of the cryptocurrency market, has significantly reduced his clients’ trading activity. “Last year, we took on many of our operational functions under the assumption that the increased retail involvement we had seen with equity and crypto markets in the COVID era would last until 2022,” he said. In this new environment, we operate with more staff than we should. As CEO, I have approved and taken responsibility for our ambitious staffing trajectory – this is up to me. ” In short, between the sanction imposed on Robinhood Crypto and the choice to cut employees, the company is not doing well. Let’s see how it will go in the future.