Coinbase pays $100 million settlement, FTX’s Robinhood shares under investigation

Yahoo Finance’s David Hollerith joins the Live show to report that Coinbase has reached a $100 million settlement with New York regulators.

Video transcript

DAVE BRIGGS: All right, let's take a look at Coinbase shares right now ahead of the close. You can see shares up just over 1% with the crypto focused company agreeing to pay a $50 million fine to the New York State Department of Financial Services.

Financial regulators issued the fine on claims Coinbase allowed customers to open accounts without conducting sufficient background checks and therefore violated anti-money laundering laws. Our David Hollerith has been following the story. David, I butchered the numbers there, up 11%. Bad eyes-- need the glasses to read anything on that television screen there. What's the latest?

DAVID HOLLERITH: Hey. Yeah, I mean, I wear contacts, so--

SEANA SMITH: Same. It saves us.

DAVID HOLLERITH: Yeah, in addition to the $50 million fine that they have to pay, it's also they have to put in about $50 million more for the next two years towards their compliance department. And of course, this is coming from the New York State Financial Services Department.

And the superintendent has come in and sort of explained this in the release. And essentially, it's an issue of growth, which is obviously interesting because that is a reoccurring problem for crypto, I would say, this year-- over the last years, I guess we can say.

So, essentially what happened is they had a compliance-- a transaction monitoring system. And over time, they let the amount of alerts that they had unanswered in terms of unknown transactions accumulate. And they had been repeatedly asked for more compliance by the state regulator. And clearly, this comes during a time where a lot of-- after FTX, everyone is expecting-- has to assume the worst, at least, if you're a regulator, yeah.

SEANA SMITH: Yeah, certainly--

DAVE BRIGGS: Everybody wanted the next shoe to drop, yeah.

SEANA SMITH: Yeah, they do, yeah. And I think there's just a lot of concern, just in general, what this means for crypto going forward and what the crypto space even looks like over the next 12 months. But David, you mentioned FTX. Let's talk about the latest developments that we're just getting today because there certainly has been this fight over shares of Robinhood tied to SBF at FTX. What can you tell us?

DAVID HOLLERITH: Yeah, so today, FTX lawyers in the bankruptcy case have pointed out the Justice Department in the criminal case has-- is in the process, or potentially has already-- the language was very clear-- seized the Robinhood shares that were originally bought by Sam Bankman-Fried. Now the situation that's interesting here is they were bought through a shell company called Emergent Ventures.

And at one point, during sort of the last days of FTX before they filed for bankruptcy, they were also-- these shares were promised as collateral to BlockFi, the crypto lender that went bankrupt because of FTX. So there's a bit of a changeup between the creditors, BlockFi being one of the largest, who were trying to get their hands on these shares now. They're worth about $460 million now. That's obviously gone down a little bit, but--

DAVE BRIGGS: Still the biggest piece of value existing, right?

DAVID HOLLERITH: Yeah.

DAVE BRIGGS: With the FTX bankruptcy.

DAVID HOLLERITH: Yeah, not-- I mean, not last year. But obviously, it's the asset that has held the value the most.

DAVE BRIGGS: Right, other than a few pieces of real estate, that's really all they've got. All right, David Hollerith, good stuff. Thank you, man.