KuCoin Crypto Exchange Accused of Anti-Money Laundering Violations by U.S. Authorities

U.S. federal prosecutors have charged the crypto exchange KuCoin and two of its founders with violating anti-money laundering laws. The prosecutors stated that KuCoin operated in the U.S., misled at least one investor about its operations in the U.S., failed to register with U.S. government entities, and did not maintain an anti-money laundering program.

The U.S. Department of Justice announced in an indictment that KuCoin and its founders operated the exchange as a money-transmitting business with over 30 million customers. However, they did not implement a know-your-customer (KYC) or AML program until 2023, and even then, the KYC program did not apply to existing customers. The founders, Chun Gan and Ke Tang, were not arrested according to the DOJ press release.

According to the DOJ indictment, KuCoin did not register with the U.S. Financial Crimes Enforcement Network as a money services business.

Due to the lack of KYC and AML programs, KuCoin was used for laundering proceeds of suspicious and criminal activities, including sanctions violations, darknet markets, and malware, ransomware, and fraud schemes.

The CFTC also filed a suit against KuCoin, alleging that the company did not register as a futures commission merchant, swap execution facility, or designated contract market. The CFTC is seeking monetary penalties, trading and registration bans, and an injunction, while the DOJ is seeking forfeiture alongside criminal penalties.

In a statement, Homeland Security Investigations Special Agent in Charge Darren McCormack called KuCoin “an alleged multibillion-dollar criminal conspiracy” and noted it was one of the largest crypto exchanges.

U.S. Attorney Damien Williams stated that KuCoin actively tried to hide the fact that substantial numbers of U.S. users were trading on its platform. He mentioned that KuCoin received over $5 billion and sent over $4 billion of suspicious and criminal funds.

Following the announcement, KuCoin’s native token (KCS) dropped by 5%, while Bitcoin’s price dropped 1% and is currently trading around $70,000.

UPDATE (March 26, 2024, 15:25 UTC): Adds additional detail.

UPDATE (March 26, 15:40 UTC): Adds more details from the CFTC and DOJ filings.

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