BitFlyer Fined $1.2 Million for Violating Cybersecurity Regulations

Following the discovery of “multiple deficiencies” in BitFlyer USA’s cybersecurity program, the NYDFS issued a $1.2 million fine.

The BitFlyer USA cryptocurrency exchange was fined $1.2 million by the New York State Department of Financial Services (NYDFS) for violating state cybersecurity laws.

The watchdog, however, supported the company’s initiatives to advance in that area by the end of 2023.

The NYDFS Launches Another Attack
The punishment was enforced by New York’s regulatory body after it found “multiple deficiencies” in BitFlyer USA’s cybersecurity program. It served as a reminder that the NYDFS serves as the state’s primary watchdog, and as such, its superintendent has the authority to carry out investigations and, if necessary, levy fines.

According to the local requirements, BitFlyer and all other crypto exchanges licensed by the regulator should set up an appropriate cybersecurity program “to ensure the availability and functionality of the licensee’s electronic systems and to protect those systems.” That scheme should notify about potential internal and external cyber risks, granting maximum protection to clients.

“Through its examinations and investigation, the Department found that BitFlyer USA failed to meet its regulatory obligations both by failing to fully comply with the Department’s Cybersecurity Regulation and by failing to establish and maintain an effective cybersecurity program via the implementation of written policies, as required by the Virtual Currency Regulation,” stated the NYDFS.

Following the consent order’s effective date, BitFlyer has ten days to pay the fine. It must not “claim, assert, or apply for a tax deduction or tax credit with regard to any US federal, state, or local tax, directly or indirectly, for any portion of the civil monetary penalty,” the regulator stated.

The NYDFS emphasized BitFlyer’s desire to deal with the regulatory issues in spite of the fine. The platform showed a corrective action plan that might bring it into compliance with the required regulations by the end of the year.

Gemini is another cryptocurrency exchange that has run into issues with the authorities this year. In January, the NYDFS opened a probe into the Winklevoss-led company on the grounds that it had misled its 340,000 Earn users about its FDIC protection.

The Newest Requirements of the NYDFS
In exchange for yearly oversight and scrutiny, the agency recently said it would begin paying crypto companies registered in the area. Companies that have acquired a “Bitlicense” will be subject to the new regulation.

Five payments will be collected annually, consisting of four estimated quarterly settlements and one based on actual expenses.

Due to the fact that banks and insurance companies are also targets of such billing, the legislation attempts to bring cryptocurrency businesses closer to these institutions. The engagement with the regulator, in the opinion of Superintendent Adrienne Harris, might be advantageous for crypto firms.