Coinbase Fined €21.5 Million After Massive Compliance Breakdown in Europe

The regulator said the lapse exposed Coinbase’s platform to serious risks, allowing potentially illicit activity to go undetected between 2021 and 2025.

Over €176 Billion in Transactions Affected

At the heart of the case was a failure in Coinbase’s transaction monitoring software, which mistakenly excluded more than 30 million crypto transfers from being screened. The value of those unmonitored transactions exceeded €176 billion, roughly one-third of all activity passing through Coinbase Europe during that time.

Authorities said the issue persisted for nearly a year before the company fully understood the scale of the malfunction. Once reviewed, Coinbase submitted more than 2,700 suspicious transaction reports (STRs) to Ireland’s Financial Intelligence Unit for further analysis.

Regulator: “Criminals Will Take the Opportunity”

The Central Bank’s deputy governor, Colm Kincaid, warned that such failures can open the door to criminal exploitation.
“When systems break down inside financial institutions, criminals notice — and they act,” he said, emphasizing that strong anti-money-laundering (AML) frameworks are essential in crypto, where anonymity and cross-border movement make detection harder.

Kincaid added that the case underlined how vital it is for virtual asset firms to have “robust, tested, and transparent systems” capable of identifying suspicious behavior in real time.

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Coinbase’s Explanation: Coding Errors, Not Negligence

Coinbase said the compliance breach stemmed from technical coding flaws in its proprietary Transaction Monitoring System (TMS), rather than a deliberate failure. According to the exchange, three coding errors caused five out of 21 detection scenarios to partially miss transactions, particularly when crypto wallet addresses were formatted with special characters.

The company said it discovered the problem during internal audits in 2021, fixed it within weeks, and reran every affected transaction through the corrected system. This process led to the identification of around 185,000 transactions requiring manual review.

Strengthening Compliance After the Breach

Coinbase emphasized that no evidence links the missed transactions to confirmed criminal activity. Nonetheless, the exchange said it has overhauled its compliance protocols to prevent similar issues in the future.

That includes stricter testing before software updates, broader system monitoring, and deeper scenario simulations across its TMS.
“Compliance has always been central to Coinbase’s mission,” the company said. “We aim to be the most trusted and transparent platform globally — and that means learning from every incident.”

Broader Implications for Crypto Oversight

The €21.5 million fine is the 162nd enforcement case completed by the Central Bank of Ireland, pushing its total penalties to more than €428 million. Regulators said Coinbase cooperated fully during the investigation but noted the seriousness of the system lapse and the length of time it took to complete remediation.

The ruling comes as European authorities tighten their grip on crypto compliance ahead of the rollout of the MiCA regulatory framework, which will impose stricter anti-money-laundering standards and transaction oversight across the bloc.

The Central Bank said it expects all virtual asset providers to treat AML obligations with the same rigor as traditional financial institutions — and warned that further failures could lead to harsher sanctions.

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