April 25, 2024

Robinhood Seeks Regulatory Agents As It Debuts Self-custody Wallets

Robinhood is a private wallet application that serves as an intermediary between buyers and sellers of crypto assets. It permits users to trade and exchange cryptocurrencies without paying network fees. 

Robinhood To Appoint Sanction Operatives 

The firm requires regulatory agents to handle analyses and revisions of terms and conditions to prospective Robinhood users. Also, they will execute inspections, make discoveries of suspicious activities and report them. Further, clear up a case by providing proof and serving verdicts.

However, they must report any situation beyond immediate resolution to the management of the Sanction Investigation unit. A report revealed that the company is hiring and recruiting law enforcement officers toward the introduction of its self-custody wallet. Although there has yet to be an official release date, the firm plans to reveal it in the next few months. 

According to the job requirements, an applicant must possess two years or more experience as a financial crime officer. Also, they must have one year or more experience as a crypto transaction investigator. Although not necessary, chain analysis knowledge is a plus. 

NYDFS Raises Legal Claims Against Robinhood

The New York Department of Financial Services (NYDFS) fined Robinhood $30 million earlier in August. As per the report where it is contained, the crypto exchange company had disregarded several active codes. 

They include the Anti-money Laundering (AML) regulation, the Bank Secrecy Act (BSC), the refusal to draft cybersecurity law, and trade watch inefficiencies. In addition, the agency noted certain deficiencies in the firm’s regulatory system. This discovery came after sufficient scrutiny, and a follow-up inspection report showed it. 

Adrienne A. Harris, Financial Services Superintendent, commented on Robinhood’s regulatory lapses. He said the company refused to allocate adequate resources to comply with its Anti-money Laundering code. Also, its cybersecurity scheme needed to be adeptly defined to control risks. 

NYDFS also affirmed that the firm’s digital asset department failed to meet the standard required of its user base and transaction volume. As a result, Robinhood announced in 2021 that it would settle the $30 million over the acclaimed matter. 

However, initially, the firm attested to complying with the agency’s regulations. Subsequently, NADFS charged Robinhood with breaking the law by making false claims. The exchange also neglected user protection by not including a stable hotline number on its website in case of emergencies. 

Other Charges Filed Against Robinhood

Nevertheless, NADFS is one of many security agencies that have brought charges against Robinhood. First, SEC fined the company $65 million in 2020 over misinformation. Then, in 2021, Financial Industry Regulatory Authority charged the firm $70 million for misdemeanors and outages. 

Cheryl Crumpton, Robinhood’s regulatory enforcement and litigation partner, annotated past filings. Cheryl noted that the firm had resolved its issues with security agencies over the past year. In addition, the firm has significantly developed its compliance and cybersecurity regulations. 

Regulations are expedient to manage the activities of platforms and users within the crypto space. Due to this, regulatory bodies are actively ensuring these digital assets firms internalize these conducts.

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