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New York

BitFlyer Receives Penalty for Violating Laws by NY Regulator

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The NYDFS (New York State Department of Financial Services) penalizes BitFlyer USA for breaching cyber-security regulations.

BitFlyer USA cryptocurrency exchange received a penalty for the violation of cyber-security laws.

Details of the Story

Since 2017, BitFlyer USA crypto exchange and subsidiary of BitFlyer Holdings has the license to operate business in New York.

They deliver crypto trading and custodial wallet services with the United States. And the NYDFS are aware of it.

The Department recognizes the endeavors of the crypto exchange and expected them to enhance their cyber security procedure.

But the crypto exchange didn’t meet with the expectations of the NYDFS and this resulted in a penalty.

NYDFS Fines BitFlyer USA

BITFLYER

Source: freepik

On May 2, the NY State Department of Financial Services sent out a consent order to BitFlyer USA.

After that, the crypto exchange was penalized for violating the cyber-security laws.

Due to the violation, the NYDFS charged a civil monetary sanction of $1.2 million on BitFlyer USA.

According to the Department, the crypto exchange failed to keep a compliant cyber-security scheme.

Ever since BitFlyer USA acquired its license to operate in 2017 under the Virtual Currency Regulation and Cyber-security Regulation, the NYDFS kept investigating it.

The New York Department of Financial Services noticed certain flaws within the crypto exchange’s cyber-security program.

READ ALSO: Poloniex Exchange Pays $7.6M To OFAC for Alleged Violation

According to the NY regulators, the crypto exchange failed to completely comply with them.

In addition, BitFlyer also failed to maintain and establish a successful cyber-security scheme via written policies.

Yet, the NYDFS still recognizes the ongoing efforts made by BitFlyer USA to correct the shortfalls specified within the consent order.

Currency Regulation

It seems that BitFlyer USA has depended on BitFlyer Japan for its developments, customer support, audits as well as other tasks.

As a result, the crypto exchange didn’t carry out a broad risk assessment which is required by 23 NYCRR § 500.09(a).

READ ALSO: Darknet Hackers Are Selling Low-cost Crypto Accounts

However, BitFlyer USA cyber-security program wasn’t planned to safeguard its electronic systems from the unauthorized usage in violation of 23 NYCRR § 200.16(a).

Meanwhile, the regulator has mandated BitFlyer USA to upgrade its cyber-security program from now until Dec. 31 this year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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