Coinbase, the largest US-based cryptocurrency trading platform with over 100 million users worldwide, has reached a settlement with New York regulators over accusations of inadequate compliance measures.

As part of the settlement, Coinbase will pay a $50 million fine and spend an additional $50 million to improve its compliance operations. The settlement follows an investigation by the New York Department of Financial Services (DFS), which found that Coinbase had a backlog of over 100,000 alerts about potential suspicious customer transactions that were not being properly examined. The DFS also found that Coinbase had performed only basic “know your customer” checks on individuals before allowing them to open accounts and treated customer background checks as a “simple check-the-box exercise.”

One instance highlighted by the DFS involved Coinbase unknowingly aiding a digital thief in stealing $150 million from an unnamed company by claiming to be an employee of the company when opening a Coinbase account. As a result of the company’s inadequate vetting procedures, regulators ordered Coinbase to hire an outside monitor to oversee its compliance, even as the formal investigation was ongoing. The settlement requires Coinbase to work with the monitor for at least another year as it puts systems in place to improve its compliance operations. New York regulators did not disclose the identity of the monitor.

Adrienne A. Harris, New York State’s Superintendent of Financial Services, stated that Coinbase’s compliance department had failed to keep up with the company’s rapid growth. Founded in San Francisco in 2012, Coinbase has a market capitalization of over $7.6 billion. While most of its peers are based in jurisdictions with lighter regulations, Coinbase is subject to the same compliance standards as traditional banks in New York due to the state’s BitLicense program, which requires cryptocurrency firms to obtain a license before doing business with state customers.

The settlement with Coinbase follows a $30 million fine imposed by the DFS on the crypto trading arm of financial brokerage Robinhood in August for violating a range of financial regulations, including anti-money laundering laws. In November, the DFS also fined digital currency platform Kraken $1 million for failing to meet New York’s anti-money laundering and BitLicense requirements.

The cryptocurrency industry has long been a source of concern for US authorities due to its potential to undermine global anti-money laundering protections. In the past decade, state and federal authorities have taken steps to bring exchanges like Coinbase and its overseas counterparts into compliance with regulations. In addition to the BitLicense program, the US Financial Crimes Enforcement Network (FinCEN) has also established guidelines for cryptocurrency businesses to follow to prevent money laundering and other financial crimes.

Itis important to note that the settlement between Coinbase and New York regulators is not an admission of guilt by the exchange. In a blog post on its website, Coinbase’s Chief Legal Officer, Paul Grewal, stated that the company “has always sought to work with regulators in a transparent and cooperative manner” and that it “remains committed to being a leader and role model in the crypto space, and this means partnering with regulators when it comes to compliance and other areas.”

Despite the settlement, Coinbase’s business is likely to continue to grow and thrive in the coming years. The company has a strong reputation in the industry and has consistently ranked as one of the most popular and trusted cryptocurrency exchanges by users. In addition, Coinbase has taken steps to expand its business beyond just trading, with ventures such as its Coinbase Card, which allows users to spend cryptocurrency at merchants that accept Visa, and its recent acquisition of the cryptocurrency custodian Xapo.

Overall, the settlement between Coinbase and New York regulators is a reminder of the importance of compliance in the cryptocurrency industry. By working closely with regulators and implementing strong compliance measures, exchanges like Coinbase can help ensure the integrity and stability of the cryptocurrency market and contribute to its continued growth and adoption.