Coinbase’s UK subsidiary has been fined £3.5 million ($4.5 million) by British regulators for breaching an agreement aimed at preventing the cryptocurrency exchange from taking on high-risk customers.
The Financial Conduct Authority (FCA) has imposed the fine on CB Payments Limited (CBPL), a subsidiary of Coinbase Group, which operates a global cryptocurrency trading platform. The fine comes after CBPL breached a voluntary agreement it entered into in October 2020 to avoid taking on and offering services to high-risk clients.
The FCA reported that CBPL served 13,416 high-risk customers despite the settlement, with 31% of those customers depositing approximately $24.9 million. Those funds were used to make withdrawals and conduct cryptocurrency transactions on other Coinbase entities, amounting to approximately $226 million.
Therese Chambers, joint executive director for enforcement and market supervision at the FCA, criticised CBPL’s inadequate controls, saying: “CBPL’s controls had significant weaknesses and the FCA told them so, which is why the requirements were necessary. CPBL, however, has repeatedly breached those requirements. This has increased the risk that criminals could use CBPL to launder the proceeds of crime. We will not tolerate such laxity, which puts the integrity of our markets at risk.”
Coinbase responded by stressing its commitment to compliance and noted the FCA’s recognition of its proactive efforts to improve regulatory controls. The company said: “CBPL continues to proactively improve its controls to ensure compliance with its regulatory obligations. In its notice, the FCA acknowledged this and CBPL’s cooperation with its investigation.”
CBPL explained that the onboarding of high-risk customers between October 30, 2020 and October 1, 2023 was involuntary and represented only 0.34% of the total new customers acquired during that period.
