In 2021, NYDFS launched an investigation to determine whether the respondent’s compliance deficiencies had resulted in any legal violations. The investigation found “substantial lapses in [the respondent’s] KYC/CDD program, its TMS, and in its AML and OFAC sanctions controls systems, as well as issues concerning [the respondent’s] retention of books and records, and with respect to meeting certain of its reporting obligations to the Department.” NYDFS noted that in late 2020 and 2021, the respondent took steps to remediate the issues identified by the Department and the independent consultant; however, substantial weaknesses remained, and its compliance system was inadequate to handle the growing volume of the respondent’s business.

Under the terms of the consent order, the respondent must pay a $50 million civil penalty to NYDFS and invest $50 million in its compliance program. Additionally, an independent third party will continue to work with the respondent for another year, which may be extended at the Department’s sole discretion. NYDFS noted that the respondent has already taken steps to build a more effective and robust compliance program under the supervision of NYDFS and the NYDFS-appointed independent monitor. According to the respondent’s press release, the company “has taken substantial measures to address these historical shortcomings” and “remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance and other areas.”