San Francisco company Ripple Labs agreed to pay a $700,000 penalty Tuesday for running a market for XRP, the world's second largest virtual currency after Bitcoin, outside U.S. financial regulations. The Justice Department said Ripple, a developer of banking payment technologies backed by leading Silicon Valley investors, had not adhered to rules governing money services businesses, especially to prevent money laundering. Resolving a criminal investigation into its subsidiary XRP II LLC, the Justice Department said Ripple agreed to pay the penalty and bring its XRP exchange within existing regulations for money exchanges. The agreement "will resolve allegations that Ripple and its subsidiary failed to follow the law while engaging in the exchange of virtual currency and that the entities failed to establish and maintain an appropriate anti-money laundering program," the agency said. Ripple has developed XRP into the second largest virtual currency by market capitalization, estimated at $253 million by Coinmarket.com. That is less than a 10th the size of Bitcoin, but the company developed it for its own Ripple exchange network, an open-standard technology for banking transaction clearance based on a distributed network. Ripple says the technology allows banks to make faster payments "in more currencies to more markets -- all with lower risks and costs than is possible today."