Coinbase’s $100M Settlement With NY Regulator Pumps Stock 7%

After losing nearly 90% in 2022, Coinbase shares have steadily inched back into the green so far in 2023

article-image

Coinbase CEO Brian Armstrong | Blockworks exclusive art by Axel Rangel modified by Blockworks

share

Coinbase stock climbed 7% Wednesday morning following news that the exchange has agreed to settle for $100 million with New York regulators in response to anti-money laundering and compliance violations. 

The New York State Department of Financial Services found that Coinbase had violated anti-money laundering laws by allowing customers to open accounts without complete background checks, resulting in a $50 million fine. The exchange is also required to invest an additional $50 million over two years to address “serious deficiencies” in its compliance practices, the filing stated. 

After losing nearly 90% in 2022, Coinbase stock has steadily inched back into the green so far in 2023. COIN was trading more than 6% higher Wednesday at 10:30 am ET. 

The regulator alleged that Coinbase’s insufficient background checks “resulted in suspicious or unlawful conduct being facilitated through Coinbase’s platform,” the filing said. The department found that a charged criminal and an individual using a false identity were able to create Coinbase accounts and potentially use the exchange’s services to conduct illicit activities. 

“Coinbase has taken substantial measures to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance,” Paul Grewal, Coinbase’s chief legal officer, told Blockworks via email. “We believe our investment in compliance outpaces every other crypto exchange anywhere in the world, and that our customers can feel safe and protected while using our platforms.” 

The department noted that in both instances, Coinbase was cooperative with investigators and took appropriate action to recover the funds or close the accounts. Even so, the exchange’s existing system for detecting this type of activity is no longer sufficient, the regulator said. 

“Coinbase’s business and customer base have grown exponentially since it was licensed by the Department, but Coinbase was unable to keep pace with the growth in the volume of alerts generated by its [transaction monitoring systems],” the filing said. 

Since its public market debut in 2021, Coinbase has faced a variety of regulatory hurdles, sinking shares more than 90%. In September 2021, the US Securities and Exchange Commission effectively shut down Coinbase’s lending program, Coinbase Lend, by declaring such products unregistered security offerings.

In July 2022, COIN plunged 14% after the SEC classified nine tokens listed on Coinbase as securities in a civil complaint. The agency later subpoenaed the exchange to investigate how it classifies tokens. 

As the exchange continues to battle regulators over how cryptocurrencies are classified, executives have doubled down on promises that Coinbase will diversify its revenue streams and thrive even as a selloff in crypto markets sinks trading. 

“One thing we’re doing is shifting more of our revenue over time, away from trading fees to what we call subscription and services,” Coinbase CEO Brian Armstrong said in a CNBC interview in 2022, adding that those services grew to around an 18% share of the exchange’s total revenue.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Ethena Labs is leaping from its flagship synthetic dollar, USDe, to a full product suite—USDtb, iUSDe, and the Arbitrum-based Converge Chain—designed to marry crypto-native yields with TradFi-grade compliance. Our analysis shows how expanding into CME, ETF options, and tokenized Treasuries could lift protocol revenue from sub-$500 million in a bear case to several billion dollars if favorable regulation and institutional adoption align.

article-image

The L1’s Interwoven Stack is the most opinionated tech stack yet

article-image

Bitcoin is still rising, 11 years after the documentary film The Rise and Rise of Bitcoin

article-image

Arch Labs CEO told Blockworks that the team plans to launch a native token, but declined to give details

article-image

CEO Mike Silagadze tells Blockworks that the US is “open for business” and why its DeFi bank offering is the first of many

article-image

Doing one thing well and leaving everything else out is often what disruptive technologies do best