US Authorities Claim KuCoin Processed $9 Billion in Questionable Cryptocurrency Transactions

(Bloomberg) — US legal authorities have formally indicted KuCoin, a top-ranking global cryptocurrency trading platform, along with its co-founders, for neglecting to adhere to the anti-money laundering regulations of the United States.

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Allegations were presented by federal prosecutors in Manhattan on Tuesday that since its establishment in September 2017, KuCoin deliberately overlooked the creation of a robust system to prevent the misuse of its services for illegal activities, such as funding of terrorism. The platform is also accused by the US Attorney’s Office for the Southern District of New York of not properly implementing verification measures for customer identities nor compliance with the obligation to report dubious transactions.

“By not instituting even the fundamental components of anti-money laundering protocols, the accused parties permitted KuCoin to become a conduit for concealed financial dealings, thereby fostering the laundering of illicit funds,” stated US Attorney Damian Williams. He further disclosed that the platform facilitated the transfer of more than $5 billion in suspicious or criminal funding and processed in excess of $4 billion in outgoing dubious transactions.

KuCoin found itself under legal scrutiny on Tuesday as well when it became the subject of action by the Commodity Futures Trading Commission, the regulatory body governing futures and derivatives trading in the markets.

The revelation led to a rapid withdrawal of funds from KuCoin, culminating in a single-day stablecoin exodus amounting to $278 million on Tuesday – the largest since the FTX platform’s implosion in November 2022, as per figures from CryptoQuant.

In retaliation to the charges, KuCoin reassured its customer base, stating, “KuCoin continues to function efficiently, and the assets held by our patrons remain undeniably secure,” the firm declared. “We have taken notice of the reports circulating and are currently probing the intricate details through legal counsel.” KuCoin emphasized its commitment to lawful compliance, asserting, “We hold the laws and regulatory mandates of varied jurisdictions in high regard and rigorously conform to the required compliance precedents.”

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In their statement, prosecutors maintained that the platform took measures to obscure the usage of its services by a significant contingent of American clientele in order to exempt itself from United States regulatory frameworks. “Let this indictment serve as an unambiguous admonition to other cryptocurrency exchanges catering to American customers: compliance with US laws is mandatory, without exception,” Williams proclaimed.

With a daily transaction volume surpassing $2 billion, KuCoin ranks among the foremost spot cryptocurrency exchanges globally, as cited by data from CoinMarketCap.

(Updated with responses from the company in the seventh paragraph and information about stablecoin withdrawals.)

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