Coinbase Just Got Hit With A $25M Fine Over Transactions Tied to Dark Web Crime—Here’s What The Irish Regulator Found

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Ireland’s financial watchdog just dropped a multimillion-dollar hammer on a major crypto exchange, alleging that coding errors left billions in transactions unmonitored and potentially exposed the platform to serious criminal activity ranging from drug trafficking to child exploitation.

Coinbase Global (NASDAQ:COIN) saw its Irish subsidiary slapped with a 21.5 million euro ($25 million) fine on Oct. 6 after Ireland’s central bank discovered that over 30 million transactions worth more than €176 billion went unmonitored for an entire year due to faulty transaction monitoring systems.

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The penalty stems from breaches of anti-money laundering and counter-terrorist financing obligations that the regulator said created an opening for criminals to move money undetected through the platform.

The Central Bank of Ireland said three coding errors in Coinbase Europe’s transaction monitoring system caused five of 21 red-flag scenarios to fail in screening all transactions during 2021 and 2022.

What makes this particularly concerning for investors and regulators alike is the timeline. It took Coinbase almost three years to fully complete the monitoring of the affected transactions, ultimately leading to 2,708 suspicious transactions being reported to authorities for further analysis and potential investigation, Reuters reported.

“The failure of such a system within any financial institution creates an opportunity for criminals to evade detection—and criminals will take that opportunity,” Irish Central Bank Deputy Governor Colm Kincaid said in central bank’s statement.

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For Coinbase shareholders, this Irish penalty carries weight beyond the fine itself. Coinbase Europe provides crypto asset and wallet services to customers globally, facilitating use of the Coinbase Group’s trading platform to buy and sell crypto assets. That means the monitoring failures didn’t just affect European users—they potentially touched transactions worldwide.

The exchange said it fixed the coding errors within two to three weeks of detecting them and has enhanced its testing and monitoring systems to prevent similar issues. Neither Coinbase nor the Central Bank of Ireland could confirm whether the suspicious transactions—valued at €13 million —actually resulted in criminal activity, according to Coinbase.

The fine was reduced from an initial 30.7 million euros through a settlement discount and was calculated based on Coinbase Europe’s average annual revenue of 417 million euros for the period.

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This case highlights a fundamental tension in the cryptocurrency industry: platforms promise cutting-edge technology and seamless global transactions, but they’re operating in heavily regulated financial environments where traditional banking compliance standards apply.

“Crypto has particular technological features which, together with its anonymity-enhancing capabilities and cross-border nature, makes it especially attractive to criminals looking to move their funds,” Kincaid said in the statement.

For retail investors holding Coinbase stock or using the platform, the incident serves as a reminder that regulatory compliance isn’t just a checkbox—it’s a fundamental operational risk that can result in significant financial penalties and reputational damage. The exchange’s share price will likely reflect investor concerns about both the immediate financial impact and potential stricter oversight going forward.

The real question for Coinbase and its competitors isn’t whether they’ll face increased regulatory scrutiny—it’s whether their technology infrastructure can keep pace with the compliance demands of operating in global financial markets.

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This article Coinbase Just Got Hit With A $25M Fine Over Transactions Tied to Dark Web Crime—Here’s What The Irish Regulator Found originally appeared on Benzinga.com