The New York State Department of Financial Services (NYDFS) has fined crypto exchange bitFlyer USA $1.2 million for failing to meet the state’s cybersecurity requirement. Here are the details…
Cryptocurrency exchange penalized by NYDFS
Despite being licensed to operate in New York, the regulator said the exchange failed to comply with the state’s cybersecurity regulation. According to NYDFS, bitFlyer USA has submitted an improvement plan to bring itself into compliance with the state’s cybersecurity laws by the end of the year. While the exchange did not meet the state’s security requirements, NYDFS acknowledged efforts to improve its cybersecurity.
New York’s financial regulator had previously fined several cryptocurrency companies. As we have also reported as Kriptokoin.com, Coinbase comes first among them. Back in January, Coinbase was in focus for allowing users to open accounts without adequate background checks. The exchange paid $50 million to settle their charges. Last year, Robinhood’s crypto division paid $30 million for money laundering and security breaches.
Crypto exchanges are becoming more and more popular, and with it, regulatory scrutiny. Many countries are still trying to figure out how to regulate the industry. Exchanges are struggling to avoid fines and other penalties.
Bitflyer was hacked five years ago
NYDFS’ cybersecurity regulation requires companies to maintain robust cybersecurity programs that meet certain minimum standards. These standards include elements such as data encryption, access controls and incident response planning. Firms that process sensitive customer information, such as crypto exchanges, are expected to have high-level security measures. Crypto exchanges are also being targeted by hackers. In 2018, the Japanese bitFlyer, parent company of bitFlyer USA, was hacked. He lost about $60 million worth of cryptocurrencies. This event highlights the importance of robust cybersecurity measures in the crypto industry.
As crypto adoption continues to grow, it is critical that exchanges prioritize cybersecurity. Regulators are paying close attention to the industry. They can also continue to impose fines on companies that do not meet their cybersecurity requirements. As a result, bitFlyer USA was fined $1.2 million by NYDFS. The reason for this is pointed out as the state’s failure to comply with cybersecurity regulations. While the exchange has submitted an improvement plan to bring itself into compliance with the state’s cybersecurity laws by the end of the year, time will tell if it can avoid further regulatory scrutiny in the future.
This incident is a reminder of the importance of robust cybersecurity measures in the crypto industry as exchanges face greater scrutiny from regulators and are increasingly targeted by hackers.
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