Today federal regulators announced a fine (PDF) of $700,000 against cryptocurrency company Ripple Labs for failing to register as a money service business. Ripple Labs built a payment transfer platform that people can use to move real or virtual money, and the company maintains its own cryptocurrency, called XRP II, which loosely compares to Bitcoin. (Unlike Bitcoin, XRP was fully generated before it went on the market, so an equivalent to Bitcoin miners doesn't exist in XRP.)

In the cryptocurrency world, XRP was second only to Bitcoin in terms of market capitalization in 2015, according to the settlement (PDF) reached between Ripple and the Financial Crimes Enforcement Network (FinCEN), a branch of the US Department of the Treasury. FinCEN accused the company of violating the Bank Secrecy Act by failing to register as a Money Services Business while selling XRP and failing to set up an adequate anti-money laundering program. In 2013, FinCEN ruled that virtual currencies had to be properly registered with the US government and take steps to combat money laundering.

In addition to the $700,000 fine, Ripple will have to comply with all the rules and regulations set down by FinCEN for money-transferring companies, in addition to reviewing the last three years of its transactions for suspicious activity. The company must also submit to audits of its practices every two years until 2020.

Ripple's founder, Jed McCaleb, has founded other companies that have been met with controversy. He created the eDonkey filesharing platform around the time that Napster found itself in hot water, and he created the now-notorious Mt. Gox in 2010, but sold it to Mark Karpeles before the company crumbled and went bankrupt. McCaleb left Ripple Labs in 2013. He did not return Ars' request for comment.

Ripple Lab's spokesperson, Monica Long, told Ars in an e-mailed statement that Ripple Labs was happy to have the issue settled, but that FinCEN was focused on technicalities. “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,” Long wrote. “We’ve been consistent in our message of supporting a compliant and healthy Ripple ecosystem. We have not willfully engaged in criminal activity, nor has the company been prosecuted.”

”Ripple is infrastructure technology for banks to build compliant payment networks,” she continued. “The settlement announced today does not impede our ability to execute on those bank integrations. We’re continuing to focus on working towards an Internet of Value.”