The Central Bank of Ireland has fined Coinbase Europe Limited almost $25 million after finding that the cryptocurrency exchange failed to properly monitor billions of dollars worth of transactions that could have involved criminal activity.
The regulator said Coinbase’s systems failed to verify more than 30 million transactions, worth around $202 billion, between 2021 and 2022. That figure represents about a third of Coinbase’s total European activity during those years.
The missed reviews are due to a coding error in Coinbase’s automated fulfillment software. Due to the flaw, many transactions that should have been analyzed for suspicious behavior were never analyzed.
After discovering the flaw, Coinbase conducted a retrospective review and reported 2,708 transactions, worth approximately $15 million, to Ireland’s Financial Intelligence Unit. Those cases were flagged as potentially linked to drug trafficking, child exploitation or money laundering activities.
A Central Bank spokesperson said the lapse exposed significant weaknesses in Coinbase’s internal controls. “Financial institutions are expected to detect and report suspicious money movements quickly and accurately,” the regulator said.
Colm Kincaid, deputy governor of the Central Bank for consumer and investor protection, warned that the nature of cryptocurrencies makes them particularly attractive to criminals.
“The speed, borderless design and privacy features of cryptocurrencies appeal to those moving illicit funds,” Kincaid said. “Companies in this sector must apply the same strict standards as traditional banks.”
Coinbase said the problem occurred when its monitoring system was first set up and insisted it was not deliberate. The company has since fixed the error, reported expired transactions, and deleted accounts linked to the suspicious activity. Both Coinbase and the Central Bank said that none of the transactions reviewed have been confirmed as criminal.
The fine still requires formal approval from Ireland’s High Court, which must approve significant financial penalties before they can be applied. Coinbase said it worked closely with authorities throughout the investigation and strengthened its compliance systems to prevent a repeat of the ruling.
The case is one of the largest cryptocurrency-related law enforcement actions in Europe to date. Regulators across the EU are tightening supervision of digital asset platforms ahead of new rules under the Markets for Crypto Assets (MiCA) framework, which will introduce uniform compliance standards across member states from 2025.
Ireland has become a European hub for several important exchanges due to its access to EU markets and its English-language regulatory environment. The Central Bank’s decision shows that even as Ireland courts investment in fintech, it expects crypto firms to meet the same anti-money laundering standards as established financial institutions.
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