The Facts
The New York State Dept. of Financial Services (NYDFS) on Tues. announced it had fined online brokerage Robinhood's crypto division $30M for inadequately staffing and resourcing its anti-money laundering and cybersecurity program.
NYDFS also accused the trading platform of not monitoring its transactions on a scale matching the company's growth and criticized it for not having a customer complaint phone number, which is required by law.
The Spin
Narrative A
This fine is an appropriate warning to Robinhood as it continues to grow as a company in the finance industry. The young crypto trading app bit off more than it could chew and is now paying the price. Hopefully, the company will reflect on its previous administrative decisions and work to build a safer platform for its users in the future.
Narrative B
Robinhood's business model is based on a predatory app that has "gamified" investing in the name of "democratization." The company was perfectly happy to scale up its user engagement while ignoring the duties of oversight and regulatory compliance. With such a track record, this latest penalty is not likely to be the last.
