The Central Bank of Ireland has fined Coinbase €21.5 million after discovering serious failures in its transaction monitoring system, as the platform failed to check over 30 million transactions between 2021 and 2022 worth more than €176 billion. Authorities noted that some of these operations were linked to potential criminal activities, including money laundering, drug trafficking, fraud, and child sexual exploitation.
The regulatory body explained that the fine was originally €30.7 million, before being reduced after Coinbase agreed to a formal settlement. The platform reported that the problem stemmed from three software errors in its automated transaction monitoring system, as five verification processes did not function correctly, allowing a large number of transactions to pass through without scrutiny.
In one example, the system failed to recognize wallet addresses containing unique tokens, causing some transactions to bypass Coinbase's automated compliance filters. The company discovered the error through internal testing and stated that it fixed the system within weeks, but the review of backlogs took nearly three full years.
During the review, Coinbase identified nearly 185,000 transactions for further investigation and reported suspicious transactions amounting to approximately €13 million to the authorities. Although the Central Bank did not confirm a link between these operations and actual crimes, it described the monitoring failure as a significant regulatory breach threatening the integrity of the financial system.
Coinbase confirmed that it has fixed all technical errors and strengthened compliance and oversight measures, stating that the incident was not a result of intentional neglect. The company also announced its intention to relocate its European operations to Luxembourg by the end of the year, meaning it will no longer operate under Irish supervision.
The Coinbase case reflects the increasing oversight by European authorities on cryptocurrency platforms, as regulators tighten the enforcement of anti-money laundering and anti-terrorism financing standards, a trend expected to reshape compliance practices in the digital sector over the coming years.
