US Department of Justice accuses the exchange of operating without a money-transmitting license and violating anti-money laundering regulations: the details.
On March 26, the cryptocurrency exchange KuCoin and its two founders, Chun Gan and Ke Tang, were accused by the United States Department of Justice of alleged violations of the country’s anti-money laundering laws.
Details of the accusations
The Department of Justice alleges that KuCoin conducted activities in the United States without registering with the appropriate authorities and without adhering to anti-money laundering laws, thereby violating the Bank Secrecy Act regulations.
According to the accusation, KuCoin, which has a customer base of over 30 million people worldwide, began implementing KYC & AML procedures for new users only in 2023. Existing customers, however, were not subjected to any identity verification or fund source verification procedures. The lack of such control procedures allegedly allowed the use of over $9 billion in suspicious transactions. The exchange has been accused of being used as a tool to launder proceeds from illicit activities, including earnings from sanctions violations, trades in darknet markets, malware, ransomware, and Ponzi schemes. Additionally, KuCoin indirectly received over $3.2 million from Tornado Cash, a cryptocurrency mixing service.
In addition to the accusations by the Department of Justice, the Commodity Futures Trading Commission (CFTC) has also filed a complaint against KuCoin. The exchange is accused of failing to register as futures commission merchants (FCM), swap traders, or as a designated contract market.
Both US authorities are assessing possible next steps, which could include monetary damages, trading bans and registration requirements, injunctions, asset confiscation, and criminal penalties.
For the charges against them, the founders of KuCoin could each face a maximum sentence of five years in prison.
Following the news, the exchange experienced an outflow of approximately $1 billion from the platform.
