Coinbase Was Penalized $3.6 Million By The Dutch Central Bank

Key Points:

• The Dutch Central Bank (DNB) has accused cryptocurrency exchange Coinbase of failing to complete pre-approval processes in order to provide services to local consumers until September 22, 2022. For this “extremely serious” breach, Coinbase’s European office was fined 3,325 million euros (approximately 3.6 million USD).
• DNB said that bitcoin exchanges had a competitive advantage since they do not incur custody charges.

The unlicensed Dutch activity of Coinbase was categorized as a “very serious infraction” by the DNB Central Bank.

The Dutch Central Bank (DNB) has accused cryptocurrency exchange Coinbase of failing to complete pre-approval processes in order to provide services to local consumers until September 22, 2022. As a result, the European office of Coinbase was fined 3,325 million euros (approximately 3.6 million USD) for this “extremely serious” breach.

The exchange filed to operate as an exchange and wallet service provider in September 2020, but withdrew the application a few months later. The explanation provided was a failure to comply with the DNB’s strict anti-money laundering and terrorist financing requirements, which have also applied to the crypto business since 2020.

As a result, from November 15, 2020 to August 24, 2022, the firm operated without a license. Coinbase was not officially licensed until November 2022. DNB, on the other hand, argued that cryptocurrency exchanges have a competitive edge since they do not have to pay custodial costs.

Registration is a required legal condition to join the Dutch market, the DNB’s enforcement order says: “Coinbase has been broken for approximately two years, during which the number of Dutch consumers also quadrupled. As a result, the severity of the incident is quite high. As a worldwide bitcoin service provider, Coinbase should be informed of all applicable rules and regulations. And the platform’s actions are heinous.”

The Coinbase representative persisted, and the corporation did not agree, reviewing the objection and complaint procedure for the Dutch bank’s accusation. “The Netherlands has awarded a license to operate and has not made any remarks on our service. As a result, Coinbase should not be punished for continuing to respect the regulations.”

The aforesaid fine has been significantly enhanced beyond the base penalty of 2.18 million USD. The reason for this is because Coinbase is one of the world’s major cryptocurrency exchanges, as well as the largest in the Dutch market. 

Binance received a similar charge for the same reason last year, and KuCoin also received a warning from DNB Central Bank. In August 2022, the developer of the money mixer platform Tornado Cash was arrested in the Netherlands.

Coinbase was fined $50 million by the New York government (USA) for its inadequate KYC procedure in early January 2023, and was compelled to spend another $50 million to rebuild the whole identity verification business. use.

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