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- NYDFS fines crypto exchange BitFlyer USA for $1.2 Million for violating cybersecurity requirements.
- NYDFS previously fined Coinbase, Robinhood’s crypto arm, for similar violations.
Cybersecurity is essential to the crypto and blockchain industry, as it involves sensitive data and billions of dollars in investments. Agencies and regulators keep stern eyes on companies violating the mentioned laws. On May 3, 2023, crypto exchange bitFlyer USA was fined by NYDFS for violating states’ cybersecurity requirements.
BitFlyer USA Fined for Violating Cybersecurity Requirements
The New York State Department of Financial Services (NYDFS) has fined bitFlyer USA for violation despite having an operating license in New York. However, NYDFS acknowledged the crypto exchange’s effort to enhance cybersecurity. bitFlyer exchange then presented the regulator with a redemption plan, making the exchange compliant with the states’ cyber securities norms by the end of 2023.
BitFlyer would have to report its progress in enhancing cybersecurity to NYDFS every quarter.
Previous Fines on Breach of Cybersecurity
NYDFS previously fined other crypto companies; in January 2023, crypto exchange Coinbase had to pay a $50 Million fine to settle the charges. The regulator claimed that the exchange allowed users to create accounts without conducting background checks. Coinbase was also fined for violation of Anti-money laundering (AML) laws.
In another suit, Coinbase was accused of collecting its users’ fingerprints and other biometrics data. This act was a breach of Illinois’ privacy laws. The data stored paved a grave danger of identity theft in the event of a data breach. A hacker can easily steal the identity and carry out hacks and other illicit activities without fearing being caught.
In the third quarter of 2022, Robinhood’s crypto arm was fined $30 Million by NYDFS. As per the regulator, Robinhood’s Bank Secrecy Act and Anti-money laundering compliance program were inadequately staffed to work optimally. They also failed to transition from a manual transaction monitoring system to an automated one in the required time, following the firms’ growth in size, volume, and customer profiles.
The cryptocurrency industry is subjected to many cybersecurity risks: crypto hacking, wallet theft, Phishing e-mail, malware, and 51% attacks. Cryptocurrency exchanges and wallets are easy targets for cybercriminals. A hacker gains unauthorized access to and steals digital assets. The industry is marred with multi-billion dollars worth of hacks.
If crypto wallets are insecure, they can be easily stolen and their assets looted. Hence it is advised to keep most assets in cold wallets and diversify the portfolio across multiple hot wallets. Users can enable multi-level security options and emphasize non-custodial wallets.
Phishing scams tricks people like a fish is caught with bait at the end of a fishing pole. Bad actors lure naive investors by making them click on malicious links, taking them to duplicate sites or platforms to steal their assets. They can also download malware into the users’ system, which would then be used to gain control of the device and carry out the act.
Hackers manage to gain 51% of the blockchain and use this authority to manipulate the blockchain and enjoy double-spending. The crypto industry is prone to such attacks, and although they are doing everything in their power to avoid them, the users are advised to be vigilant to be safe.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
