Crypto Exchange Faces Hefty $3.1M Fine from Dutch Central Bank – What Went Wrong?

The Dutch Central Bank (DNB) has levied a hefty fine of $3.1 million on Crypto.com for what it terms as "non-compliance." This action comes after Crypto.com, also known as Foris DAX MT Limited (DAX MT), allegedly operated without proper registration and provided crypto services illegally for a span of over two years in the Netherlands.

Crypto.com Faces Serious Allegations of Violating Dutch Wwft Regulations

DNB's investigation uncovered significant violations in Crypto.com's operations. The exchange was found to have breached Section 23b(1) and (2) and Section 23c(3) of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). These violations include offering professional or business services for the exchange of virtual currencies without proper registration with the DNB in the Netherlands, as well as providing custody wallets.

Crypto.com Fined €285,000 for Grave Violations of Dutch Wwft Regulations

The severity of Crypto.com's non-compliance warranted categorization as a Category 3 fine by the Dutch Central Bank. Initially set at a base amount of €2 million ($2.17 million), the fine was escalated to €2.85 million ($3.1 million) due to the perceived severity and extent of the violation. DNB took into account Crypto.com's significant market presence in the Netherlands, which further justified the heightened penalty.

DNB Evaluates Crypto.com's Competitive Advantages and Compliance Costs

DNB also noted Crypto.com's competitive advantage over registered competitors, as it avoided paying supervisory fees or other compliance costs to the DNB. Additionally, the bank emphasized that Crypto.com's purported inability to pay the fine did not warrant a reduction, as there was no evidence supporting such a claim.

Dutch Central Bank DNB Strengthens Cryptocurrency Exchange Compliance Regulation: Crypto.com Faces Administrative Fines

This isn't the first instance of the DNB imposing administrative fines on crypto exchanges for non-compliance. Earlier, both Coinbase and Binance faced fines exceeding €3 million for similar violations. While Coinbase managed to obtain regulatory approval in 2022, Binance opted to cease operations in the Netherlands after failing to secure DNB registration.

Despite Crypto.com subsequently obtaining DNB registration in July 2023, it remains liable for the administrative fine for the period preceding its authorization. The incident underscores the Dutch Central Bank's commitment to enforcing regulatory compliance within the crypto sector, ensuring adherence to established legal frameworks and registration requirements.