Crypto exchange bitFlyer USA has been fined $1.2 million by the New York State Department of Financial Services [NYDFS]. According to the regulator, the crypto exchange failed to meet the state’s cybersecurity requirements. The NYDFS went on to acknowledge bitFlyer USA’s cooperation “throughout this investigation.” The department also recognized and credited the firm’s ongoing efforts to “remediate” the shortcomings identified.
In fact, the official statement revealed that the exchange has already started working in that direction. It is doing so by “devoting significant financial and other resources to a remediation plan that has been approved by the Department.” Notably,
“bitFlyer USA will report its progress to the Department on a quarterly basis.”
This plan is designed to bring the firm into compliance by 31 Dec. 2023.
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Coinbase, and Robinhood fined previously
Leaving aside bitFlyer’s cybersecurity violation charges, the NYDFS has fined a host of other companies from the industry. Back in January 2023, for instance, Coinbase paid a $50 million fine to settle charges. The NYDFS claimed that the exchange allowed users to create accounts without conducting necessary background checks. In fact, the regulators found that the firm’s policies violated AML laws.
In another suit filed a day back, Coinbase has been blamed for collecting fingerprints and other bio-metrics of its customers. This breaches Illinois’ privacy law, according to the complaint. Coinbase’s collection and storage of data expose users to “serious” privacy risks such as identity theft, in the event of a data breach, the suit further alleged.
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Prior to Coinbase, Robinhood’s crypto arm was fined $30 million in Q3 2022. According to the NYDFS, Robinhood’s Bank Secrecy Act and AML compliance program was “insufficiently staffed” and “failed to transition in a timely manner” from a manual transaction monitoring system that was appropriate for the firm’s size, volumes, and customer profiles.
Alongside the NYDFS, other U.S. regulators like the SEC have also been taking enforcement actions against crypto companies. Several well-known names from the industry are already under the radar. In fact, according to a recent Bloomberg opinion piece, crypto’s clash with U.S. regulators “could be the best thing that ever happened to the industry.” As per the authors, the general reduction in “scamminess” would provide genuine creators with the “best possible shot” at achieving something consequential.”
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