Crypto.com Faces Heavy Fines in Dutch Regulatory Crackdown

Table of Contents

• Netherlands’ Regulatory Crackdown
• Failure to Register Under WWFT
• Attempt to Reduce Fine
• DNB’s Stance

The Dutch Central Bank of Netherlands has slapped a $3 million fine on Crypto.com over allegations that it breached registration laws. 

Netherlands’ Regulatory Crackdown

The Netherlands’ central bank, De Nederlandsche Bank (DNB), has imposed a hefty fine of €2.85 million ($3.1 million) on Crypto.com for severe violations. The crypto firm, operating under the name Foris DAX MT Limited, faced this penalty after failing to register for two years, from May 2020 to November 2022, violating anti-money laundering and terrorism financing laws.

The base fine for such violations begins at $2.1 million, but due to the seriousness and gravity of the offense, authorities significantly increased the financial penalty.

Failure to Register Under WWFT

Since May 21, 2020, the DNB mandated all crypto service providers to register under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (WWFT). Despite this regulation, Crypto.com chose not to comply, extending its unregistered status until November 8, 2022.

Crypto.com flourished in the Netherlands, attracting a substantial customer base while evading regulatory obligations such as supervisory fees and compliance costs. 

However, this success came with consequences, as the firm failed to report suspicious transactions to the Financial Intelligence Unit-Netherlands, hindering anti-money laundering efforts.

Attempt to Reduce Fine

In an attempt to lessen the penalty, Crypto.com argued for a fine reflecting a violation of 'low severity.' It claimed to have adhered to WWFT objectives, maintained customer due diligence, and reported unusual transactions to Malta’s Financial Intelligence Analysis Unit (FIAU). The company finally completed its registration in the Netherlands by July 2023. 

A spokesperson from Crypto.com expressed disappointment with the DNB's decision, emphasizing their commitment to address concerns and collaborate with regulators transparently. 

They said, 

“We are disappointed and disagree with their (DNB’s) decision to fine Foris DAX MT Ltd and are actively appealing this decision. Moreover, we have already addressed the concerns raised in a timely and transparent manner and received regulatory approval from DNB as a crypto service provider in July last year. We remain fully committed to collaboratively engaging with the DNB and regulators around the world.”

DNB’s Stance

Despite these claims, the DNB maintained the severity of the violation, upholding the substantial fine. The DNB defended its decision, asserting that Crypto.com posed an increased risk of involvement in money laundering or terrorism financing. It upheld its view that the violations were severe, rejecting Crypto.com's attempts to mitigate the fine.

The case underscores the importance of regulatory compliance and the severe consequences of non-compliance in the crypto industry, even in a relatively tolerant country like the Netherlands. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.