After completing the $100 million settlement with the NYDFS, Coinbase stock rose by 12%.
Major exchange Coinbase saw its stock climb considerably after it reached a deal with a state financial services authority.
On Wednesday, the announcement that Coinbase Global Inc. had reached an agreement with a New York regulator caused the company's stock to surge by 12 percent.
One of the most prominent crypto currency exchange in the United States has agreed to pay one hundred million dollars to the New York Department of Financial Services.
Coinbase has accepted to pay a fine of fifty percent of the total settlement amount and will put the remaining fifty million dollars toward improving its compliance operations.
Coinbase stock reached a high of $38.5 per share after the agreement and closure of the NYDFS investigation, which it first announced in 2021. The day before the price surge, COIN had dropped 5% and reached an all-time bottom of $31.86 the other week.
The New York DFC has previously decided that it found "significant failures" in Coinbase's compliance. According to the New York regulator, how the exchange assessed customer identities and informed on activities fell short of industry norms.
It was alleged that Coinbase had a backlog of 100,000 notifications on potentially sketchy customer transactions. In addition, the NYDFS argued that Coinbase failed to maintain track of its client base increase between 2020 and 2021.
In a released statement (1), the New York Department of Financial Services reacted to the development, saying:
“Coinbase has acknowledged its failures in this respect to the Department. Furthermore, certain of these issues have been known to Coinbase since at least 2018, flagged through both internal assessments and external reviews, including examinations conducted by the Department.”
The NYDFS also said that "although Coinbase has worked to correct these issues, its progress has been slow: progress in certain areas did not occur until recently, and work remains outstanding to the present."
Comments of Coinbase's Chief Legal Officer
Paul Grewal, the CLO at Coinbase, also commented on the claims made by the NYDFS. Grewal pointed out that even though the exchange takes pride in its dedication to compliance, it still recognizes room for improvement. The head of law at Coinbase further stated that the business is making every effort to address these issues. Grewal recently stated in a tweet (2):
"We're proud of our dedication to compliance, but we are also willing to admit where we have fallen short, including by paying penalties & working diligently to fix issues," the company declares.
Stéphane Ouellette, CEO of FRNT Financial, commented on Coinbase's Settlement with the New York Financial Services Authority. He believes this development mostly involves the NYDFS stating its case before moving on. The CEO of FRNT Financial cited the NYAG lawsuit against Bitfinex/Tether as additional evidence in favor of his position.
According to Ouellette, the administrative bodies in the United States have paid relatively little attention to Bitfinex and Tether since the ensuing settlement between the two parties. The regulatory emphasis appears to have shifted elsewhere.
The Matter Finally Laid to Rest
The recent increase in the price of Coinbase shares may be because shareholders now comprehend the exchange's regulatory concerns more thoroughly. In a 2021 Securities and Exchange Commission document, the company first identified the NYDFS inquiry as a potential danger to its business operations. But yesterday's news of a settlement brings the matter to a close.