US cryptocurrency exchange Coinbase has reportedly agreed to pay a $50 million fine to the New York State Department of Financial Services.

Fine and investment of $50 million

The exchange has to pay this amount because they allowed users to register accounts without conducting the necessary background checks. This in turn is against the anti-money laundering regulations in the country.

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In addition, the US cryptocurrency exchange is also reportedly required to invest an additional $50 million to strengthen its compliance program. This program is there for a reason and is designed to deter drug dealers, child pornography, and other potential lawbreakers from opening accounts.

Coinbase will have to comply with the terms of the settlement with the New York State Department of Financial Services. If they don't, they're in for bigger problems. Of course, the exchange does not want this either. In total, Coinbase has lost $100 million as a result.

Compliance issues for the first time in 2020

In the year 2020, the compliance issues at Coinbase were first discovered. This was during a customary review, which took place after the crypto exchange successfully obtained an operating license in the US state of New York in 2017. Authorities discovered issues with the exchange's anti-money laundering measures dating back to 2018.

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Subsequently, Coinbase agreed to engage the services of an outside consultant to help it reorganize its day-to-day operations to meet the requirements imposed by anti-money laundering laws. These laws simply stipulate that the crypto company must know the identity of its customers and monitor their activities to detect suspicious activity. That didn't solve the company's problems, however, and officials launched a more formal investigation in 2021. The result of this investigation is the fine that has since been imposed. The investment of $50 million on top of the fine is expected to prevent problems at Coinbase in the future.