First Binance and Now Coinbase Have Been Fined $3.3m
The leading
digital assets exchange Coinbase has been slapped with a hefty $3.3 fine by the
Dutch central bank, De Nederlandsche Bank (DNB). A fine of an identical amount
was paid a few months earlier by rival platform Binance.
According
to the DNB’s press release, the fine was imposed due to the unauthorized crypto
activities of the Coinbase exchange in the past, from November 2020 until at
least 24 August 2022.
The
Coinbase European subsidiary, Coinbase Europe Limited, had been operating
unregistered in the Netherlands since at least November 2020. Earlier in May of
the same year, the DNB imposed a registration requirement on all cryptocurrency
service providers due to the high risk of money laundering and terrorist
financing.
The base
fine for a violation committed by Coinbase is €2 million but was increased due
to the fact that Coinbase is one of the largest cryptocurrency exchanges in the
world and has a large number of consumers in the Netherlands.
“In
addition, Coinbase has enjoyed a competitive advantage in that it has not paid
any supervisory fees to DNB or incurred other costs in connection with DNB’s
regular supervision activities. A further important reason for the increased
fine is that the non-compliance persisted over a prolonged period,” DNB
stated.
The
decision to impose the fine was made on 18 January, but the official
announcement was not made to the media until 26 January.
DNB imposes administrative fine on Coinbase Europe Limited for providing crypto services without the legally required registration until 22 September 2022. https://t.co/wEjAez6GDs pic.twitter.com/cDzXxKRqq4
— De Nederlandsche Bank (@DNB_NL) January 26, 2023
Binance Paid a Similar Fine
in July
The Dutch
regulator imposed an identical fine on rival platform Binance last July.
Binance had to pay a €3.3 million penalty for offering local investors access
to cryptocurrency services without proper regulation.
DNB’s
explanation at the time was very similar: Binance is a large exchange with a
sizable customer base, which used a competitive advantage in failing to comply
with local regulations. The Dutch regulator pointed to the anonymity of
cryptocurrencies, which can become a tool for money laundering without proper oversight.
“The
registration requirement for crypto service providers was introduced on 21 May,
2020 because of the high risk of money laundering and terrorist financing
associated with crypto services. This is related to the anonymity associated
with crypto transactions. The registration requirement enables DNB to monitor
the risk of illicit financial flows more effectively,” the regulator
explained.
Almost a
year earlier, the DNB had issued a public warning against Binance for
unauthorized activity. Several other regulators have published similar notices.
Watch the recent FMLS 2022 Executive Interview with Lory Kehoe, Director of EMEA Business Development at Coinbase.
Coinbase Faces Crypto
Winter Troubles
The fine
imposed on Coinbase adds to the recent problems the platform has faced. At a
time when rival Binance is increasing its headcount, Coinbase decided to shed its
workforce in the face of a prolonged cryptocurrency winter.
Due to the
staff cuts, the platform has decided to suspend its operations in the Japanese
market. All local customers must withdraw their funds and transfer them to
another platform until 16 February 2023.
“Due
to market conditions, our company has made the difficult decision to halt
operations in Japan and to conduct a complete review of our business in the
country. However, we are committed to making this transition as smooth as
possible for our valued customers,” Coinbase wrote in a blog post.
Many other
cryptocurrency exchanges have reported job cuts in the period. Luno announced a
similar decision this week, reducing its workforce by 35%. Earlier, a potential
reduction was announced by Crypto.com, looking to lay off up to 20% of current
employees.
The leading
digital assets exchange Coinbase has been slapped with a hefty $3.3 fine by the
Dutch central bank, De Nederlandsche Bank (DNB). A fine of an identical amount
was paid a few months earlier by rival platform Binance.
According
to the DNB’s press release, the fine was imposed due to the unauthorized crypto
activities of the Coinbase exchange in the past, from November 2020 until at
least 24 August 2022.
The
Coinbase European subsidiary, Coinbase Europe Limited, had been operating
unregistered in the Netherlands since at least November 2020. Earlier in May of
the same year, the DNB imposed a registration requirement on all cryptocurrency
service providers due to the high risk of money laundering and terrorist
financing.
The base
fine for a violation committed by Coinbase is €2 million but was increased due
to the fact that Coinbase is one of the largest cryptocurrency exchanges in the
world and has a large number of consumers in the Netherlands.
“In
addition, Coinbase has enjoyed a competitive advantage in that it has not paid
any supervisory fees to DNB or incurred other costs in connection with DNB’s
regular supervision activities. A further important reason for the increased
fine is that the non-compliance persisted over a prolonged period,” DNB
stated.
The
decision to impose the fine was made on 18 January, but the official
announcement was not made to the media until 26 January.
DNB imposes administrative fine on Coinbase Europe Limited for providing crypto services without the legally required registration until 22 September 2022. https://t.co/wEjAez6GDs pic.twitter.com/cDzXxKRqq4
— De Nederlandsche Bank (@DNB_NL) January 26, 2023
Binance Paid a Similar Fine
in July
The Dutch
regulator imposed an identical fine on rival platform Binance last July.
Binance had to pay a €3.3 million penalty for offering local investors access
to cryptocurrency services without proper regulation.
DNB’s
explanation at the time was very similar: Binance is a large exchange with a
sizable customer base, which used a competitive advantage in failing to comply
with local regulations. The Dutch regulator pointed to the anonymity of
cryptocurrencies, which can become a tool for money laundering without proper oversight.
“The
registration requirement for crypto service providers was introduced on 21 May,
2020 because of the high risk of money laundering and terrorist financing
associated with crypto services. This is related to the anonymity associated
with crypto transactions. The registration requirement enables DNB to monitor
the risk of illicit financial flows more effectively,” the regulator
explained.
Almost a
year earlier, the DNB had issued a public warning against Binance for
unauthorized activity. Several other regulators have published similar notices.
Watch the recent FMLS 2022 Executive Interview with Lory Kehoe, Director of EMEA Business Development at Coinbase.
Coinbase Faces Crypto
Winter Troubles
The fine
imposed on Coinbase adds to the recent problems the platform has faced. At a
time when rival Binance is increasing its headcount, Coinbase decided to shed its
workforce in the face of a prolonged cryptocurrency winter.
Due to the
staff cuts, the platform has decided to suspend its operations in the Japanese
market. All local customers must withdraw their funds and transfer them to
another platform until 16 February 2023.
“Due
to market conditions, our company has made the difficult decision to halt
operations in Japan and to conduct a complete review of our business in the
country. However, we are committed to making this transition as smooth as
possible for our valued customers,” Coinbase wrote in a blog post.
Many other
cryptocurrency exchanges have reported job cuts in the period. Luno announced a
similar decision this week, reducing its workforce by 35%. Earlier, a potential
reduction was announced by Crypto.com, looking to lay off up to 20% of current
employees.
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