Ripple Labs reached a settlement with the Financial Crimes Enforcement Network, agreeing to pay $700,000 for operating as a money services business without registration and failing to maintain adequat
Ripple Labs reached a settlement with the Financial Crimes Enforcement Network, agreeing to pay $700,000 for operating as a money services business without registration and failing to maintain adequate anti-money laundering safeguards. FinCEN's enforcement action documented violations spanning several years, during which the company sold XRP without proper licensing and operated without written compliance programs.
The agency had published guidance governing virtual currency exchanges in March 2013. That document outlined specific requirements for companies handling digital assets. Ripple Labs took a different approach. Rather than register directly, the company created XRP II as a subsidiary to sell XRP while supposedly operating outside the regulatory framework. From August 4 through September 4, 2013, XRP II conducted currency sales without a money services business license before registering on September 4, 2013.
Even after registering, serious gaps remained. XRP II failed to implement basic compliance infrastructure. The company did not develop a written anti-money laundering program until September 26, 2013—three weeks after registering. The anti-money laundering compliance officer position remained empty until late January 2014, a six-month gap during which the subsidiary was already selling virtual currency to third parties. XRP II's internal controls fell short of Bank Secrecy Act standards. The subsidiary conducted no anti-money laundering risk assessment until March 2014. Employee training on the anti-money laundering program did not occur until nearly a year after sales began, at which point Ripple Labs was aware of a federal criminal investigation. XRP II did not complete an independent review of its compliance program until nearly a year after operations commenced.
FinCEN's enforcement documents included information about XRP's pre-mined status. Ripple pre-mined all tokens before distribution, distinguishing XRP from cryptocurrencies that miners created through proof-of-work. While the agency did not explicitly cite the pre-mine as grounds for the enforcement action, FinCEN listed this fact in the background section, suggesting regulators may have considered the design structure in their decision. In settlement agreements like this one, companies often pay fines without admitting to wrongdoing.
Ripple Labs issued a statement in response. The company said it was "pleased to have resolved this matter and to move forward with our business" and emphasized its commitment to building compliance programs. "An early company in an emerging, undefined fintech category, Ripple Labs was one of the first to proactively build out a compliance and risk program," the statement read. Ripple noted that it had registered XRP II as a money services business in 2013 to comply with FinCEN's March 2013 guidance, hired a chief compliance officer in January 2014, added a general counsel, and brought on a Bank Secrecy Act officer in February 2015. The company stressed that it had cooperated extensively with government investigators during the probe and that the settlement would not impede bank partnerships that form the core of its business strategy. "Ripple is infrastructure technology for banks to build compliant payment networks," the statement said. The company also referenced its mission to develop what it calls "an Internet of Value."
Ripple had announced discussions about a pilot program with Western Union before regulators made the enforcement action public. That timing raised questions about whether Western Union knew of the regulatory scrutiny.
BitStamp moved forward with expansion plans after recovering from a major security breach that struck the exchange in early 2015. The exchange had lost approximately 19,000 Bitcoin in the incident but has since stabilized operations. The company partnered with Vogogo to handle risk management and payment processing services while accelerating its entry into North American markets. Under the arrangement, Vogogo also will enhance BitStamp's existing European operations. The expansion northward marks BitStamp's next phase after rebuilding user confidence.
A technical debate among Bitcoin Core developers emerged around the proposal to increase the network's maximum block size from one megabyte to twenty megabytes. Gavin Andresen, who leads Bitcoin Core development, authored a response addressing privacy concerns that Peter Todd had raised. Todd, formerly a Bitcoin Core developer, now works for the Viacoin team but maintains influence in the broader cryptocurrency community. Todd has contributed code to multiple cryptocurrency projects including Colored Coins, Mastercoin, and Counterparty. His concern centered on whether larger blocks could compromise user privacy in countries with restrictive governments.
Andresen's response examined the practical implications. Most users operate lightweight wallets that download only transactions they initiate and receive. Changes to the maximum block size do not affect these wallets because they never download the full blockchain. For miners in oppressive countries who want to run a full node or attempt solo mining, users can maintain connectivity to external pools and mining infrastructure through Tor or VPN services. The eighty-byte block header size does not change with block capacity, so that constraint remains constant regardless of the proposed increase.
Todd retweeted Andresen's post with a sarcastic response but did not directly address the arguments that Andresen made. The two developers maintain professional respect despite their technical disagreement on this matter. Andresen indicated he welcomed the ongoing debate between the two figures in the Bitcoin development world.
