Coinbase’s UK Arm Slapped with $4.5M Penalty Over High-Risk Customer Onboarding.
The Coinbase’s UK arm, CB Payments Limited (CBPL), has been fined a significant $4.5 million (£3.5 million). The penalty followed an agreement breach that prohibited onboarding customers classified as “high-risk.” Notably, the United Kingdom’s Financial Conduct Authority (FCA) announced the fine on Thursday, highlighting weaknesses in CBPL’s customer control mechanisms. FCA Agreement With Coinbase’s UK Arm In 2020 In October 2020, Coinbase’s UK arm signed a voluntary agreement with the Financial Conduct Authority (FCA). Per the agreement, CBPL consented to stop accepting new customers identified as “high-risk” by the regulator. In addition, the exchange agreed to cease providing services to these individuals. The agreement aimed to curb money laundering and maintain the crypto market’s integrity. However, contrary to the agreement, the FCA discovered that CBPL had onboarded and served about 13,416 “high-risk customers.” Consequently, the FCA imposed a £3.5 million ($4.5 million) fine on the cryptocurrency exchange’s UK subsidiary, underscoring the regulator’s zero tolerance for such negligence. The strict stance aims to dissuade other financial institutions from breaking regulatory standards. 🚨 REPORT: COINBASE SUBSIDIARY FINED £3.5M BY FCA FOR VIOLATING CUSTOMER REGULATIONS CB Payments Limited (CBPL), a Coinbase subsidiary, was fined £3.5M by the FCA for violating restrictions on high-risk customers. Despite a voluntary requirement to stop onboarding high-risk… pic.twitter.com/NjDc8hxfnr — JAKE (@JakeGagain) July 26, 2024 Therese Chambers Calls Out The CBPL Shortcomings FCA’s joint executive director of enforcement and market oversight, Therese Chambers, waded into the agreement breach saga, criticizing the CBPL for its shortcomings. According to the director, CBPL’s control had several weaknesses. The FCA identified the drawbacks and has set out requirements for the CBPL to navigate them. However, the reverse has been the case, with many violations coming from the Coinbase’s UK arm trading platform. Furthermore, she pointed out the dangers of poor compliance, including the increased risk of criminal and other illegal activities within CBPL. CBPL Reacts In response to the penalty, Coinbase acknowledged the FCA’s findings and pointed out that it remains committed to ensuring compliance with regulatory demands. Furthermore, CBPL clarified that it had not intentionally onboarded “high-risk” customers. Therefore, it is actively working to ensure the breach doesn’t repeat itself. Noteworthily, the trading platform stated that the so-called “high-risk” customers contributed only 0.34% of the exchange’s customer pool.
Coinbase Appoints Former Clinton Adviser Chris Lehane and Two Others to Executives’ Board
Coinbase has expanded its board of directors to a ten-man team by appointing three new executives. “Today we announce that Chris Lehane, Paul Clement, and Christa Davies are joining Coinbase’s Board of Directors,” stated the exchange in a post on X. Former Clinton Adviser Joins Coinbase’s Executives’ Board The most striking of the new appointments is Chris Lehane, new board director at Coinbase. Chris Lehane was a senior executive – Vice President of Public Works at OpenAI, a US-based intelligence company. He was also a former Clinton adviser before his recent appointment. Before President Clinton’s double tenure in office from 1993 to 2001, Lehane functioned as his party strategist in 1992, contributing to his victory in the elections. In addition to his many achievements, Lehane was instrumental in establishing Airbnb. For context, Airbnb is a US-based homestay experience rental company stationed in every state in the US and other locations worldwide. Other Appointees Christa Davies was also one of the other appointees. She has previously served as the Chief Financial Officer (CFO) for Aon, a management consultation company. Interestingly, she also served as Microsoft’s CFO and will oversee Coinbase’s finance operations, compliance, and auditing. Paul Clement, the third appointee, was a partner at Clement & Murphy Law Firm. Additionally, he was the Attorney General during President George Bush’s administration, which lasted two tenures. Following his new appointment, he will assist Davies in her roles and champion Coinbase in their legal confrontations with the US SEC. Globally, new rules and policies have sprung up to incorporate cryptocurrency into economies’ structures to enhance financing in general. Such appointments, interlacing the political and electronic finance spheres, bolster this motive. Coinbase seemed to have recognized the above assertion following the latest appointments, “They each have different political philosophies and career paths, but all have arrived at the same conclusion: crypto is a powerful tool to update the system,” stated Coinbase in the post. Today we announce that Chris Lehane, Paul Clement, and Christa Davies are joining Coinbase’s Board of Directors. They each have different political philosophies and career paths but all have arrived at the same conclusion: crypto is a powerful tool to update the system. pic.twitter.com/bQyEtO6thl — Coinbase 🛡️ (@coinbase) July 25, 2024