• Robinhood Crypto reportedly had major flaws in its cybersecurity program
  • The AML program 'failed to timely transition from a manual transaction monitoring system '
  • Robinhood confirmed cutting off 23% of employees due to Q2 losses

Robinhood Crypto, the cryptocurrency arm of Robinhood, has been fined a whopping $30 million by the New York Department of Financial Services (NYDFS) for allegedly violating anti-money laundering (AML), cybersecurity and consumer protection laws.

In a statement Tuesday, Adrienne Harris, the superintendent of NYDFS - the authority responsible for regulating financial services and products - said that the American financial services company will have to pay the $30 million fine "for significant failures in the areas of bank secrecy act/anti-money laundering obligations."

"As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance—a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations," Harris added.

Harris stated that all crypto firms operating in New York are subject to the same "anti-money laundering, consumer protection, and cybersecurity regulations" as firms belong to the world of traditional finance. The superintendent also added that the Department of Financial Services (DFS) will "continue to investigate and take action when any licensee violates the law or the Department’s regulations."

According to the statement, the DFS conducted a supervisory examination and a subsequent enforcement investigation which revealed that Robinhood Crypto's AML program and transaction monitoring system had significant flaws and was inadequately staffed.

The DFS also found that the AML program "failed to timely transition from a manual transaction monitoring system that was inadequate for RHC’s size, customer profiles, and transaction volumes; and did not devote sufficient resources to adequately address risks specific to RHC." Similar flaws were found in Robinhood Crypto's cybersecurity program.

Additionally, as per a blog post, Robinhood laid off 23% of staff after revealing a significant loss in Q2, 2022. The Financial Times reported Tuesday that 780 employees might be affected.

“As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me," co-founder and CEO Vlad Tenev said.

Stock trading platform Robinhood will cut its workforce by 23 percent
Stock trading platform Robinhood will cut its workforce by 23 percent AFP / Olivier DOULIERY