What Led to Coinbase’s $36 Million Fine? Uncovering the Truth
Coinbase, one of the largest cryptocurrency exchanges in the world, has been hit with a $36 million fine by the Dutch Central Bank (DNB) in the Netherlands for violating regulations. DNB stated that Coinbase has a substantial amount of users from Northwest Europe and has not been compliant.
The fine marks the largest penalty ever imposed on a cryptocurrency exchange. It is a significant blow to Coinbase, which has become one of the most well-known and respected names in the crypto industry.
DNB further clarified that Coinbase did not register with the DNB that monitors Anti-money laundering activities in the country. According to Dutch law, cryptocurrency companies should register with the bank first. This law was passed in May 2020 to check money laundering and terrorism using cryptocurrencies which can be anonymous.
DNB said that Coinbase had failed to implement proper anti-money laundering and know your customer procedures. As AML and KYC are important to prevent the use of digital currencies for illegal activities, failure to comply has severe repercussions. They did not comply with the regulations over the time period extending from November 2020 to August 2022.
Coinbase has time till March 2, 2023, to appeal to the central bank on the fine.
Earlier this Jan 2023, Coinbase was fined $50 million by the New York State Department of Financial Services for breaking laws against money laundering. They also had to spend an extra $50 million over 2 years to fix U.S. security compliance and other regulations.
What this fine would mean to the crypto industry?
Coinbase’s $36 million fine serves as a reminder of the importance of compliance in the cryptocurrency industry. The company has stated that it will cooperate with the regulator and take all necessary steps to ensure that it is compliant with regulations in the future. Other cryptocurrency exchanges should also take note of the fine and ensure that they are following all regulations to avoid similar penalties.