Coinbase is fined $24.7 million after serious technical errors left suspicious transactions without necessary inspection and verification procedures.

Coinbase Europe Limited, the European arm of US digital currency trading platform Coinbase, has agreed to pay a €21.5 million ($24.7 million) fine to the Central Bank of Ireland (CBI), after a series of software errors that failed to subject thousands of customer transactions to security checks for suspicious activity between 2021 and 2022.

The Irish regulator said the errors represent a “fundamental failure of regulatory compliance” within Coinbase’s transaction monitoring system, which is responsible for monitoring transactions potentially linked to money laundering or other illegal activities. According to the Irish Independent, these failures affected approximately 31% of total Coinbase Europe transactions during the aforementioned period, amounting to over $202 billion.

Coinbase tightens controls after being fined €21.5 million for transaction tracking errors

The company revealed the settlement agreement in a blog post on Thursday, confirming its full cooperation with regulators. She explained that the problem resulted from three software errors that led to five of 21 transaction monitoring scenarios failing, resulting in only partial review of a number of operations. As part of this review, the company reanalyzed approximately 185,000 transactions out of approximately 97 million transactions completed during the relevant period.

The transaction review process resulted in approximately 2,700 suspicious financial activity reports being submitted to Irish authorities, with an estimated total value of €13 million. Coinbase confirmed that the settlement agreement contains no indication that any of the reported transactions have been proven to be linked to criminal activity.

The Irish Central Bank’s decision was based on the company’s average annual revenues in Europe, which amounted to approximately €417 million between 2021 and 2024. Coinbase explained that it fixed the software errors within weeks of their discovery and also strengthened monitoring and compliance mechanisms to prevent the recurrence of such vulnerabilities in the future.

Since opening its Dublin office in 2018, Coinbase Europe has expanded its operations in the European Union in preparation for the implementation of the European Digital Asset Market Regulation Act (MiCA). In 2023, the company has chosen Ireland as its main headquarters for its European operations, so that it can operate in all EU member states once the new laws come into force.

Pressure increases on Coinbase’s European branches amid strengthening anti-money laundering measures

This regulation is part of a series of regulatory measures facing Coinbase’s international branches.

In July 2024, the UK’s Financial Conduct Authority (FCA) fined CB Payments Limited, the UK subsidiary of Coinbase, £3.5 million ($4.5 million) for violating a voluntary restriction that prevents it from dealing with high-risk customers.

The authority concluded that the company provided e-money services to more than 13,000 customers in this category, with a transfer value exceeding $226 million through platforms linked to Coinbase. The measure represents the first application of the Electronic Money Act 2011 in the UK, raising concerns about increased regulatory oversight of UK crypto companies. However, legal experts described the sanction as an “individual case” and not an indication of a global campaign against the sector.

At the same time, European authorities are strengthening their anti-money laundering monitoring within crypto companies ahead of the introduction of MiCA. In France, regulators are carrying out field inspections at a number of registered digital asset companies, including Binance and Coinhouse, to assess whether they meet European licensing standards.

Reports indicate that the French Prudential Control and Surveillance Authority (ACPR) has asked the Binance platform to increase risk controls and compliance systems as part of its inspections. Regulators in France, Austria and Italy have also urged the European Supreme Markets Committee (ESMA) to directly supervise major crypto platforms, given the disparity in law enforcement between EU member states.

In an official statement, Coinbase confirmed that it has taken comprehensive steps to improve transaction monitoring systems, including expanding testing protocols, adding new layers of internal controls, and designing additional scenarios to monitor high-risk activity. The company said in its statement: “Coinbase recognizes the importance of having effective anti-money laundering systems and takes its legal and regulatory obligations with the utmost seriousness,” emphasizing its commitment to building “a trusted, compliant and secure global platform.”

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