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Crypto.com Fined €2.85 Million by Dutch Central Bank

Published March 14, 2024 1:07 PM
Teuta Franjkovic
Published March 14, 2024 1:07 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The Netherlands’ central bank, DNB, is imposing stricter regulations on cryptocurrency service providers.
  • Crypto.com received a multimillion euro fine for operating unregistered for over two years.
  • Crypto.com cut costs but faces AML heat for skipping registration.
  • Celebrity deals and stadium naming rights fueled Crypto.com’s trading boom.

De Nederlandsche Bank (DNB), the central bank of The Netherlands, issued a fine  to Crypto.com for operating without the necessary registration for over two years.

Although the fine was imposed in October, the announcement  was made public on March 13. The reasons for the delay in public disclosure or the timing of the announcement remain unclear.

Crypto.com Fined €2.85 Million for Unregistered Dutch Operations

On October 23, DNB levied a fine of €2.85 million euros (equivalent to $3 million at that time) against Foris DAX MT, commercially operating as Crypto.com. The fine was for offering cryptocurrency services without the necessary registration from May 21, 2020, until at least November 8, 2022. The requirement for such registration was introduced by DNB on May 21, 2020, marking the period of non-compliance by Crypto.com.

Under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act , providers of cryptocurrency services are mandated to register. The base fine for violations of this requirement is set at €2 million. However, in the case of Crypto.com, DNB  increased the fine amount due to the severity of the violation and the degree of culpability.

Crypto.com Scooped Unfair Advantage, Now Faces AML Heat

Crypto.com gained a competitive edge by avoiding supervisory fees and compliance costs during the period it operated without the necessary registration. The platform had a “significant number” of customers in this timeframe. Additionally, due to its unregistered status, Foris DAX MT (Crypto.com) was unable to report any unusual transactions to the Financial Intelligence Unit-Netherlands, a critical compliance failure under anti-money laundering regulations.

Crypto.com contested the decision made by DNB by filing an objection on October 9. Despite the earlier issues, Crypto.com secured its registration  in The Netherlands in July 2023. Following this, a DNB spokesman told Cointelegraph that Dutch users had been within their rights to use the exchange services, despite the platform’s previous illegal operation status. This situation underscores the complexities and regulatory challenges within the cryptocurrency space, especially concerning international operations and compliance standards.

Dutch Clampdown on Crypto: Binance Fined, 41 Now Registered

DNB established registration requirements for cryptocurrency service providers in April 2022. Binance, a prominent name in the crypto space, faced a €3.3 million fine (equivalent to $3.5 million at the time) for its operations without the requisite registration. This penalty came after Binance received a warning from DNB in August 2021. Following an unsuccessful attempt to secure registration, Binance announced its decision to cease operations in The Netherlands in June 2022.

As of now, there are 41 crypto service providers that have successfully registered in The Netherlands, indicating compliance with DNB’s regulations aimed at combating money laundering and terrorist financing within the crypto industry. This regulatory landscape underscores the Dutch authorities’ commitment to ensuring a secure and regulated environment for the burgeoning cryptocurrency market.

Crypto.com Scores Big with Marketing Blitz, Trading Volume Takes Off

Crypto.com has seen a notable increase in its spot trading volume, outperforming established competitors such as Kraken and KuCoin. This surge in trading activity is down, at least in part, to the exchange’s aggressive marketing efforts over recent years.

Notably, Crypto.com made a significant splash with an advertisement during the 2022 Super Bowl, featuring basketball icon LeBron James , under the slogan “fortune favors the brave.” In 2021, the platform initiated a substantial $100 million advertising campaign that spanned 20 countries and featured actor Matt Damon . This campaign was part of a broader strategy that included sponsorship deals and collaborations with major sports and entertainment entities, such as the Philadelphia 76ers, the Ultimate Fighting Championship, and Formula 1 Racing.

A landmark move in its marketing and branding efforts was the acquisition of the naming rights to the then Staples Center, a major sports and entertainment arena in Los Angeles and home to the Lakers. Crypto.com secured these rights with a $700 million investment, renaming the venue to Crypto.com Arena . This decision marked a significant milestone in the company’s efforts to strengthen its brand presence and visibility globally.

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