Coinbase Globa Inc’s United Kingdom arm, CB Payments Ltd (CBPL) has recently faced a substantial fine of over £3.5 million ($4.5 million) imposed by the UK’s Financial Conduct Authority (FCA). According to the press release, this penalty arose from CBPL’s failure to adhere to regulatory requirements regarding the onboarding and servicing of high-risk customers.
CBPL Fined for Money Laundering Lapses
The FCA’s investigation found that CBPL’s internal controls and procedures needed to be better to stop high-risk customers from joining the firm. In 2020, CBPL agreed to a voluntary requirement (the VREQ) after talking with the FCA about worries that CBPL’s system to control financial crime wasn’t working well. The VREQ meant CBPL couldn’t take on new high-risk customers until it fixed its system.
Despite existing restrictions, CBPL continued to provide e-money services to 13,416 high-risk customers, highlighting significant lapses in compliance. In response to the FCA’s actions, CBPL has acknowledged the deficiencies in its compliance practices and expressed its commitment to rectifying these issues.
The company has initiated a comprehensive review of its internal processes and has pledged to implement more stringent controls to ensure adherence to regulatory standards. Additionally, CBPL has highlighted its cooperation with the FCA throughout the investigation and its intention to take corrective measures to prevent future violations.
Coinbase Hits Operational Success
In 2023, the cryptocurrency exchange achieved operational and product innovation success. The company’s earnings statement highlighted its ability to adapt and thrive despite having experienced low growth in over one year.
In February, Coinbase surpassed analyst expectations with its fourth-quarter results, reporting a revenue of $953.8 million. This represents a notable 41% increase from the previous quarter and a 50% increase from the previous year. Notably, Coinbase’s strategic initiatives, such as its product offerings expansion and its platform’s user experience, contributed to its strong performance in the fourth quarter.
Coinbase Takes a Stand Against the SEC
In a filing, Coinbase stated that the United States Securities and Exchange Commission (SEC) is serious about destroying digital assets. However, the exchange pushes the court to compel the regulator to create fair rules for the crypto industry, arguing that the agency is unwilling to engage in meaningful dialogue to establish such guidelines.
Meanwhile, the Coinbase argument has support from within the SEC. Hester Peirce, a well-known pro-crypto SEC Commissioner, recently advocated for a cross-border sandbox program between the United States and United Kingdom blockchain firms experimenting with tokenized securities.
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