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CATEGORY: new york department of financial services


Stablecoin issuer Paxos reportedly probed by New York regulators

Author: Cointelegraph By Brayden Lindrea
United States
Feb 10, 2023 08:20

Stablecoin issuer Paxos reportedly probed by New York regulators

While the exact reason for the investigation hasn’t been revealed, it has been reported that the New York regulator plans on upping its efforts to protect consumers this year.

Jan 05, 2023 12:25

Coinbase Reaches $100M Settlement with NY Regulator for AML Failure

<p class="MsoNormal text-align-justify">American cryptocurrency exchange, Coinbase, has agreed to pay $100 million settlement given lapses the New York Department of Financial Services (NYDFS) found in its anti-money laundering (AML), customer due diligence (CDD) and suspicious activity reporting systems. </p><p class="MsoNormal text-align-justify">This is as the state regulator said it found “significant failure” in the exchange’s compliance programme that resulted in the violation of the New York Banking Law and other regulations. NYDFS <a href="https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202301041" target="_blank" rel="follow">disclosed </a>on Wednesday in a press statement that the exchange firm had agreed to pay a $50 million penalty to the State of New York and to also invest another $50 million in its <a href="https://www.financemagnates.com/terms/c/compliance/" target="_blank" id="569f58ee-534c-44f0-a7cd-f55b0f9a2b2a_2" class="terms__main-term">compliance</a> efforts over the next two years. </p><p class="MsoNormal">New York Regulator Declares Coinbase's Compliance System as "Immature"</p><p class="MsoNormal">According to the state regulator, Coinbase's compliance failures made the platform "vulnerable to serious criminal conduct, including, among other things, examples of fraud, possible <a href="https://www.financemagnates.com/terms/m/money-laundering/" target="_blank" id="f30ffb65-351e-44d6-9dae-0714f08b59b2_1" class="terms__secondary-term">money laundering</a>, suspected child sexual abuse material-related activity, and potential narcotics trafficking." The state watchdog further noted that Coinbase, which it licensed in 2017 to offer virtual currency and money transmitting business in the state, “failed to build and maintain a functional compliance programme that could keep pace with its growth.”</p><p class="MsoNormal">Check out this recent Finance Magnates London Summit 2022 chat with UK legislator Dr Lisa Cameron on cryptocurrency.</p><p class="MsoNormal">NYDFS said it found Coinbase’s AML, CDD and transaction monitoring system (TMS) to be “immature” as well as “inadequate” for a financial services provider of its size and complexity. “Coinbase treated customer onboarding requirements as a simple check-the-box exercise and failed to conduct appropriate due diligence,” the regulator noted.</p><p class="MsoNormal">As a result of Coinbase’s poor systems, <a href="https://www.financemagnates.com/tag/new-york-department-of-financial-services/" target="_blank" rel="follow">NYDFS</a> said TMS alerts were abandoned for months in the exchange’s backlog and were not investigated and reported promptly.</p><p class="MsoNormal">Meanwhile, the state regulator said Coinbase has begun to redress many of the identified lapses by building a more effective compliance framework under its supervision. NYDFS added that it has provided “an Independent Monitor to immediately evaluate the citation and begin working with Coinbase to fix the outstanding issues.”</p> This article was written by Solomon Oladipupo at www.financemagnates.com.

Dec 22, 2022 08:45

New York Regulator Mandates Crypto Permission for Banks

<p class="MsoNormal">The New York Department of Financial Services (NYDFS) has published guidance that requires banking firms under the State of New York to seek advance permission from it before they or their authorized third-party agents engage in cryptocurrency-related activities.</p><p class="MsoNormal">According to the state financial regulator, the rule also extends to the branches and agencies of foreign banking organizations under its supervision. In addition, the Department noted that such organizations are to provide information related to their business plan, risk management, corporate governance and oversight, consumer protection, financials, and legal and regulatory analysis, in their permission proposals.</p><p class="MsoNormal">Guidance Clarifies Crypto Permission for Banks</p><p class="MsoNormal text-align-justify">Furthermore, <a href="https://www.dfs.ny.gov/system/files/documents/2022/12/il20221215_prior_approval.pdf">the guidance</a> requires firms that are already into digital asset-related activities to immediately inform the regulator of such activities if they are yet to do so. In this regard, the regulator noted that it will seek further information and put forward supervisory conditions as needed.</p><p class="MsoNormal">The guidance comes at a time the cryptocurrency is battling with <a href="https://www.financemagnates.com/cryptocurrency/ftx-the-rise-the-fall-and-the-reaction/">the collapse</a> and <a href="https://www.financemagnates.com/cryptocurrency/troubled-ftx-files-for-bankruptcy-as-ceo-bankman-fried-resigns/">bankruptcy</a> of crypto exchange, FTX, whose Founder and former CEO, Samuel Bankman-Fried <a href="https://www.financemagnates.com/cryptocurrency/sam-bankman-fried-arrested-in-the-bahamas-amid-us-criminal-charges/">was arrested</a> earlier this week and is <a href="https://www.financemagnates.com/cryptocurrency/us-cftc-charges-bankman-fried-ftxcom-and-alameda-with-fraud/">facing criminal charges</a> in the United States for allegedly mishandling customer’s funds.</p><p class="MsoNormal">NY Regulator Curtailing Crypto Risks</p><p class="MsoNormal">Adrienne Harris, NYDFS’ Superintendent, explained that the guidance is critical to protect the funds of consumers and keep banking firms regulated by the State of New York resilient and competitive.</p><p class="MsoNormal">“The Department takes seriously the potential risks that novel activities, including in particular virtual currency-related activities, may pose to Covered Institutions [regulated banks], to consumers, and to the market in general, and the Department will make a comprehensive assessment of the information presented under this Guidance to determine whether any proposed activity would — based on the facts and circumstances presented and including the risk mitigation measures the Covered Institution has developed to support the activity — be appropriate for a Covered Institution to undertake,” the state regulator explained in the guidance.</p><p class="MsoNormal">The regulator pointed out that it developed the guidance after conducting a robust analysis of the existing regulatory landscape and market trends. In addition, the Department said it consulted with advocates, other state and federal regulators, industry, and academics, to develop the rules.</p> This article was written by Solomon Oladipupo at www.financemagnates.com.

Apr 20, 2022 11:30

Licensed Cryptocurrency Companies May Face Assessment Fees in New York

New York may soon require licensed crypto firms to pay assessment fees. The New York Senate passed by 2023 budget on 9 April, granting the New York Department of Financial Services (NYDFS) to charg...

Mar 30, 2022 08:45

New York Approves Apex Crypto Application for BitLicense

Apex Fintech Solutions, the parent company of Apex Clearing Corporation, has announced on Tuesday that the New York State Department of Financial Services (NYDFS) approved the application of Apex C...

Mar 01, 2024 12:25

Winklevoss Twins Gemini Commits to Return $1.1 Billion to Earn Customers

Gemini Trust, owned and controlled by the Winklevoss twins, has settled with the New York State Department of Financial Services (DFS), committing to return $1.1 billion to the Earn customers, 100 percent of their locked-up holdings.

Settlement amid Monetary Commitments

Announced yesterday (Wednesday), Gemini will contribute $40 million towards the bankruptcy proceedings of Genesis, which provided services for the Earn program. Under the settlement, another $37 million will go to the New York regulator as a penalty for significant failures that threatened the safety and soundness of the company.

Gemini failed to conduct due diligence on an unregulated third party, later accused of massive fraud, harming Earn customers who were suddenly unable to access their assets after Genesis Global Capital experienced a financial meltdown, said the Superintendent of the DFS, Adrienne Harris.

Todays settlement is a win for Earn customers, who have a right to the assets they entrusted to Gemini.

Earn Update: Today, we are pleased to announce that we have finally reached a settlement in principle with Genesis and other creditors in the Genesis Bankruptcy that will, if approved by the Bankruptcy Court, result in all Earn users receiving 100% of their digital assets back in

GeminiTrustCo (@GeminiTrustCo) February 28, 2024

A Questionable Scheme

Under the Earn program, customers received interest against their digital assets, which were loaned to other customers. Gemini received the digital assets from the Earn customers and loaned them to Genesis, which later lent the assets to other counterparties. The program was launched in February 2021 and attracted over 200,000 customers, including about 30,000 New Yorkers.

The DFS has already settled fraud charges against now-bankrupt Genesis. That settlement ensured that assets about to go to the state regulator would be returned to former Earn customers and other Genesis creditors instead. Genesis also had to return its BitLicense and exit operations in the state.

The New York regulator further pointed out that apart from the Earn program, Geminis unsafe and unsound practices also threatened the company's financial health. The investigation found that an unregulated affiliate of Gemini collected hundreds of millions of dollars in fees from Gemini customers, ultimately weakening the companys financial stability.

If, under the latest settlement, Gemini fails to return the proceeds to Earn customers, the DFS will take further action against the company. Gemini has committed to working through Genesis' bankruptcy process to ensure full recovery of Earn customers' assets.

This article was written by Arnab Shome at www.financemagnates.com.

Jul 19, 2023 10:30

Nasdaq Halts Crypto Custody Plans Amid Tough US Regulatory Environment

Adena Friedman, CEO of Nasdaq, the international securities marketplace, announced that the firm is postponing its cryptocurrency custody plans due to the United States’ “regulatory environment.” During a Q2 earnings call, Friedman disclosed that Nasdaq aimed to launch the service last quarter, but it has been put on hold. U.S. ‘Regulatory Environment’ Forces Nasdaq to [...]

The post Nasdaq Halts Crypto Custody Plans Amid Tough US Regulatory Environment appeared first on Crypto Breaking News.

May 19, 2023 05:50

Coin Cafe to repay $4.3M in fees that ‘wiped out’ investors’ Bitcoin accounts

Cryptocurrency trading platform Coin Cafe has been ordered to repay $4.3 million to its users after allegedly charging “exorbitant and undisclosed fees” for storing Bitcoin on the platform — leading to some accounts being drained entirely of its funds. Based in Brooklyn, Coin Cafe initially filed an application for a virtual currency license with the [...]

The post Coin Cafe to repay $4.3M in fees that ‘wiped out’ investors’ Bitcoin accounts appeared first on Crypto Breaking News.

Jun 17, 2023 05:50

DAI Emerges as Third-Largest Stablecoin, Overtaking BUSD in Market Capitalization

Makerdao’s DAI stablecoin is now the third-largest stablecoin by market capitalization, surpassing Binance USD (BUSD), which has officially declined to $4.304 billion. DAI’s market valuation on Friday, June 16, 2023, is approximately $4.394 billion, but the number of circulating DAI has decreased by 5.7% since last month. Stablecoin Rankings Shuffle: DAI Ascends to Third-Largest Stablecoin [...]

The post DAI Emerges as Third-Largest Stablecoin, Overtaking BUSD in Market Capitalization appeared first on Crypto Breaking News.

Mar 15, 2023 05:50

Signature Bank Closure Has Nothing to Do With Crypto, Says Regulator

The decision to close down Signature Bank had “nothing to do with crypto,” said the New York State Department of Financial Services, the regulator that took possession of the troubled bank on Sunday. The financial watchdog insisted that its decision to put Signature Bank in receivership “was based on the current status of the bank [...]

The post Signature Bank Closure Has Nothing to Do With Crypto, Says Regulator appeared first on Crypto Breaking News.

Apr 07, 2023 05:50

New York Regulator Calls Crypto Theories Associated With Signature Bank Closure ‘Ludicrous’

Adrienne A. Harris, the superintendent of New York’s Department of Financial Services, has branded as “ludicrous” the claims that the closure of Signature Bank was related to its crypto business. Harris insisted that the bank’s “high percentage of uninsured deposits” and insufficient liquidity were some of the reasons why it was closed. Signature Bank’s Liquidity [...]

The post New York Regulator Calls Crypto Theories Associated With Signature Bank Closure ‘Ludicrous’ appeared first on Crypto Breaking News.

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