UK FCA Fines Coinbase Subsidiary $4.5 Million for Compliance Breach

The Financial Conduct Authority (FCA) has fined CB Payments Limited (CBPL), the UK subsidiary of Coinbase, $4.5 million for violating a voluntary agreement. This agreement was intended to prevent onboarding high-risk customers, reducing potential criminal activity on the platform.

Breach of Agreement

CBPL signed the agreement in October 2020, but the FCA found that CBPL onboarded and serviced 13,416 high-risk clients despite the agreement. Therese Chambers, FCA's joint executive director of enforcement and market monitoring, criticised CBPL’s significant control failures, which the FCA had already highlighted before implementing the requirements.

Risk and Penalty

The FCA's enquiry revealed that these compliance failures increased CBPL's risk of criminal activity, including money laundering. The $4.5 million fine underscores the FCA's zero-tolerance stance on regulatory breaches that compromise market integrity.

Industry Impact

Crypto litigation attorney Kate Gee of Signature Litigation noted that this penalty serves as a warning to companies about the importance of financial crime management. Firms neglecting compliance will face scrutiny and enforcement.

Effect on Coinbase Shares

The penalty impacted Coinbase’s stock, causing a nearly 5.5% decline. Premarket trading on July 26 saw the price at $231.52

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CBPL’s Response

Coinbase acknowledged the infractions and reaffirmed its commitment to regulatory compliance. The company stated that only 0.3% of new clients from October 2020 to October 2023 were high-risk, and their onboarding was accidental. Coinbase is focused on improving control systems to prevent further breaches and continues to cooperate with the FCA.