Crypto regulation might cost the companies millions of dollars as penalties.
The cryptocurrency market is in a slump due to the market crash that occurred in May. The market was put under staggering amount of pressure due to the crash and this was taken as an advantage by the exploiters of the market, who started scamming and looting the investors left, right and center. To eradicate such malpractices from the market, many crypto regulatory bodies were formed. Securities Exchange Commission (SEC), Commodities Future Trading Commission and some state regulators are currently the main regulators that are operating the industry. As we know the down side of regulation, there has been several instincts, where proper regulation has actually caused loss for the crypto currency industry. For instance, SEC’s probe against a leading crypto lending company went on to cost around a 100 million dollars for the company to fight the regulatory authority.
In another situation, Robinhood, was found to be inconsistent with the rules and regulations and was apparently fined for a $30 million by the regulatory body. What exactly happened in Robinhood’s case, let’s see!
Robinhood fined $30 million as penalty.
According to reports, Robinhood’s crypto division has been slammed with a fine of $30 million by the New York State Department of Financial Services. The regulator’s multimillion dollar fine against Robinhood for what it claims are violations of the state’s anti-money laundering and cybersecurity legislation is its first enforcement action specifically aimed at the cryptocurrency industry. According to the regulatory body’s notice, a supervisory inspection revealed serious flaws in the organization’s compliance systems. The regulatory body found out that, Robinhood’s security program was in a mess and as a suitable means of making the company accountable for their mistake, the regulatory body went on to levy such a huge penalty.
In addition to paying the penalty, the regulatory body has asked the company to retain an independent consultant, who will be given the responsibility to evaluate if the company has taken proper decisions and steps to counter violations and deficiencies under the settlement.
Robinhood’s vows just piling up.
The news of the fine has just increased the worries of the company. According to the reports, it is believed that the company had gone on to lay a major chunk of its work force citing the macroeconomic conditions. The company also announced that it had a net loss of around $300 million and around $2 million active users had left the company.
According to me, regulation is important and the companies be it small or big have to comply by the rules and regulations set up. The point that I think to be taken into consideration is did the company deliberately was inconsistent or was it one of the misinterpretations of the laws. If the company was into deliberate activity, then such a huge fine is justifiable. But, if the company had made an error in interpreting the laws, then the fine should be more reasonable.
In case you like the article, share it with your friends and family and let me know, if the regulatory body took the right decision of levying such a high penalty on Robinhood.