UK regulator fines Coinbase $4.5m over repeated services for ‘high-risk’ customers

The British financial regulator has fined cryptocurrency exchange Coinbase $4.5 million for “repeatedly breaching” a requirement that prevents it from serving “high-risk customers.”

American cryptocurrency exchange Coinbase has been fined £3.5 million (about $4.5 million) for “repeatedly” breaching a condition that prevents the company from providing services to “high-risk customers,” the Financial Conduct Authority said in a press release.

According to the regulator, CB Payments Limited, part of the Coinbase Group, acts as a gateway for customers to trade crypto “through other entities within the Coinbase Group.” Despite entering into a voluntary agreement with the FCA to restrict onboarding of new customers classified as high-risk, CBPL breached this agreement by onboarding and servicing more than 13,400 high-risk customers. The FCA estimates that more than 30% of these customers deposited around $25 million.

“These funds were used to withdraw and conduct cryptocurrency transactions through other entities on Coinbase, totaling approximately $226 million.”

FCA

The British regulator attributed the breaches to CBPL’s “lack of skill, care and rigour in the design, testing, implementation and monitoring of controls”, adding that Coinbase’s “deficiencies” in its initial monitoring of compliance went undiscovered for “almost two years”.

Coinbase had not made any statement on the matter by press time, but the FCA said the exchange had agreed to resolve the issue and was entitled to a 30% discount on its fine. Following the news, Coinbase shares fell about 5%, according to data from Google Finance.