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A $100 million settlement has been reached with New York state financial regulators for failing to ensure that it can't be used for fraud, money laundering, and the dissemination of suspected child sexual abuse material.
The platform was vulnerable to serious criminal conduct, according to the New York Department of Financial Services.
The company will have to pay a $50 million fine and invest the same amount over the next two years to fix the problems, according to the regulators.
In other words, the report paints a damning picture of the current state of the industry, and highlights how easy it is for criminals to make use of household names.
The implosion of FTX, a leader in the space, has caused regulators to become more cautious of the space.
There were flaws in the attempts to keep illegal business away from the platform.
Its systems for monitoring transactions and reporting suspicious activity were woefully inadequate. The company had a huge amount of unreviewed transaction monitoring alerts.
According to the statement, "Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth" The failure exposed the platform to potential criminal activity and required the Department to take immediate action.
It will take at least one more year for Coinbase's compliance program to be up to par.
It will likely take some time for the DFS to be satisfied with the progress the exchange has made.
A settlement has been reached with a New York regulators.
The CEO of the company says that he wouldn't think that FTX stole user funds.
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