Crypto Platform Robinhood Hit With $30 Million Fine for Lax Security and Consumer Protection

By Evan Spicer

Director of Cryptocurrency Investigations

The fact that the popular crypto platform Robinhood was hit with a $30 million fine by the New York State Department of Financial Services may have a silver lining. Although it’s clear that even crypto platforms with a strong reputation can have lapses, the action demonstrates the will of regulators to take action in crypto cases. 

The Robinhood case shows that even supposedly reliable crypto platforms aren’t immune from certain deficits in consumer protection and anti-money laundering monitoring. The penalty paid by Robinhood underlines the need for constant vigilance in the crypto space and  for crypto users to use caution and not to be complacent about the security of their cryptocurrency holdings. 

How Robinhood Fell Short

Robinhood Crypto, which along with Coinbase, Gemini and Venmo, is one of the leading fintech companies that provide cryptocurrency investments, was fined $30 million by the New York State Department Financial Services for insufficient reporting and violations related to money-laundering, consumer protection and cybersecurity. 

This action is a cautionary tale of how crypto businesses tend to be focused on growth rather than on taking the necessary measures to protect their customers. According to findings by the New York Department of Financial Services, Robinhood fell short of the reporting standards that strengthen anti-money laundering efforts and also insufficiently staffed its consumer protection divisions. 

The company also failed to update monitoring systems to match the growth of its business and provide adequate protection against money laundering, hacking and suspicious activities on its platform. 

What Robinhood’s $30 Million Fine Means for Crypto Users

The good news from this development is that it demonstrates that oversight is working – crypto platforms are being held accountable for lax consumer protection and outmoded systems for monitoring potential money-laundering and fraud activities. 

Also, the role of proactive consumers can’t be underestimated. Often, what causes government agencies and regulators to take action are customer complaints. When these organizations receive a number of complaints about security breaches and frauds operating on crypto platforms, they are more likely to take action against these exchanges. 

The result – the more crypto exchanges fear penalties the more likely they are to implement strategies to protect consumers. 

As a consumer, you can play a crucial role in keeping crypto exchanges safe by making your voice heard and file a complaint if you have lost money due to a cryptocurrency fraud. Also, if you notice a broker that isn’t complying with regulations, bring it to the attention of regulators. 

MyChargeBack will give you the crucial tools to file a complaint against fraudulent brokerage services. We will guide you step-by-step through the process and will help you track down your funds. 

MyChargeBack Will Investigate Your Crypto Case

If you have lost money on the blockchain through unregulated brokers, bitcoin wallet hacking or fake merchants, talk to the MyChargeBack team. Our crypto investigations will provide evidence to bolster your claim. 

MyChargeBack has developed working relationships with law enforcement agencies worldwide, have extensive knowledge and experience with crypto tracking and can improve your prospects of getting your funds back.