Coinbase Fined £3.5 Million for Breaching Customer Agreement in the UK

British regulators have imposed a £3.5 million ($4.5 million) fine on Coinbase's U.K. subsidiary, CB Payments Limited (CBPL), for violating a voluntary agreement aimed at preventing the onboarding of high-risk customers. Following the announcement, shares of Coinbase Global fell approximately 5.5%, closing at $231.52. The Financial Conduct Authority (FCA) stated that CBPL had breached the terms of the agreement, which was established in October 2020, by onboarding 13,416 high-risk customers. The FCA's investigation revealed that about 31% of these high-risk customers deposited nearly $24.9 million, which was subsequently used for withdrawals and transactions totaling around $226 million across other Coinbase entities. The FCA emphasized that CBPL's internal controls were significantly lacking, increasing the risk of potential money laundering activities. The regulator expressed its commitment to maintaining market integrity and stated that it would not tolerate such regulatory lapses. In response to the fine, Coinbase acknowledged the FCA's findings and reiterated its commitment to regulatory compliance. The company stated that it is actively enhancing its controls to meet its obligations. CBPL clarified that the onboarding of high-risk customers was unintentional, accounting for only 0.34% of all new customers during the specified period from October 30, 2020, to October 1, 2023. The FCA recognized CBPL's cooperation throughout the investigation process.