The New York State Department of Financial Services (NYDFS) has fined cryptocurrency exchange bitFlyer USA $1.2 million.
Regulatory Action Against BitFlyer USA
BitFlyer USA cryptocurrency exchange failed to meet the state’s cybersecurity requirements, even though it has the necessary licenses to operate its services in New York, according to the financial regulator.
“During the exam period, bitFlyer USA has not yet conducted regular assessments of its internal and external cybersecurity risks and threats. Instead, the company relies on IT audits performed by bitFlyer (Japan). program, but it does not provide visibility into an organization’s security risks or how an organization is mitigating those risks, and as such, it is not an acceptable substitute for a comprehensive audit risk assessment. bitFlyer USA’s incomplete risk assessment methodology is inconsistent with the requirements of cybersecurity regulations, This regulation relies on informed decision-making based on risk assessment.”
However, the financial regulator has acknowledged the efforts of cryptocurrency exchanges to strengthen their cybersecurity compliance. BitFlyer A remedial plan has been proposed to the regulator to help it comply with the state’s cybersecurity law by the end of the year.
Previous NYDFS Actions
BitFlyer joins a long list of cryptocurrency firms and exchanges facing lawsuits from the New York State Department of Financial Services for multiple violations. Back in January, Coinbase had to pay a $50 million fine over allegations that it allowed users to open accounts on the platform without conducting adequate or satisfactory background checks as required by know-your-customer (KYC) regulations. In 2022, Robinhood’s encryption division will have to pay $30 million in fines for violations related to cybersecurity and anti-money laundering.
In February, NYDFS launched an investigation into stablecoin issuers Paxos. While the scope of the investigation into Paxos was not disclosed, it is suspected to be related to financial regulators’ efforts to regulate the stablecoin ecosystem following the collapse of the Terra ecosystem. NYDFS Director Adrienne Harris said regulators were drafting and developing regulatory guidelines for asset-backed stablecoins even before Terra’s debacle. Paxos claims on its website that its stablecoin is backed by cash reserves and U.S. Treasuries.
Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.