UK Regulator Fines Coinbase's CB Payments $4.5 Million for Serving High-Risk Customers

The UK Financial Conduct Authority (FCA) has fined Coinbase’s payments arm, CB Payments Limited, £3,503,546 for breaching compliance rules by serving high-risk customers despite restrictions. The regulator explained that this marks the FCA’s first enforcement action against a firm facilitating cryptoasset trading. The violations involved significant transactions undetected for almost two years.

FCA Fines Coinbase’s UK Payments Arm for Compliance Breaches

The UK Financial Conduct Authority (FCA) announced on Thursday that it has taken its “first enforcement action against a firm enabling cryptoasset trading.” It has fined CB Payments Ltd., which is part of the Coinbase group, £3,503,546 ($4,508,853). The regulator detailed:

CB Payments Limited (CBPL) has been fined £3,503,546 by the Financial Conduct Authority (FCA) for repeatedly breaching a requirement that prevented the firm from offering services to high-risk customers.

CB Payments Ltd., also known as “Coinbase Payments,” does not directly handle cryptoasset transactions for customers. It serves as a gateway for customers to trade cryptoassets through other entities within the Coinbase Group. CBPL is not currently registered to conduct cryptoasset activities in the UK.

In October 2020, CBPL agreed to a voluntary requirement with the FCA, barring it from onboarding new high-risk clients until it resolved its compliance issues.

However, the FCA emphasized:

Despite the restrictions in place, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers.

The FAC further revealed that approximately 31% of these customers deposited around $24.9 million, noting that these funds were used to make withdrawals and then execute multiple crypto asset transactions via other Coinbase Group entities, totaling approximately $226 million.

The UK regulator explained that these violations, resulting from inadequate control measures, went undetected for nearly two years. Therese Chambers, the FCA’s joint executive director, underscored the severity of financial crime risks in the crypto sector and the necessity for firms to maintain robust controls.