DOJ Charges KuCoin Crypto Exchange and Founders for $9 Billion Laundering, AML Violations

Publish on 26 March 2024

The cryptocurrency exchange KuCoin and two of its founders, Chun Gan and Ke Tang, have been charged by US authorities for operating as an illegal exchange in the USA and for failing to implement anti-money laundering protocols. The Department of Justice (DoJ) charged KuCoin with violating the Bank Secrecy Act and operating as an unlicensed money transmitter business.

According to the DoJ, KuCoin did not implement any know-your-customer (KYC) or anti-money laundering controls until 2023, and even then, these controls did not apply to existing customers. This lack of controls allowed more than $9 billion in suspicious transactions to take place.

The Commodity Futures and Trade Commission (CFTC) also charged KuCoin with multiple violations of the Commodity Exchange Act and is seeking to impose fines and trading bans. The DoJ is seeking forfeiture and pursuing criminal penalties.

US Attorney Damien Williams stated that KuCoin attempted to hide the fact that it was being used by a substantial number of US users and that its failure to implement basic anti-money laundering policies allowed it to operate as a haven for illicit money laundering, facilitating over $5 billion in receipts and over $4 billion in transfers of suspicious and criminal funds.

Additionally, the CFTC, in its lawsuit against KuCoin, reiterated its claim to regulatory authority over Ethereum (ETH), alongside Bitcoin and Litecoin. This statement comes after news broke last week that the SEC is campaigning to classify ETH as a security. Despite this news, ETH's price recovered to above $3,500, partly due to a broader crypto market rally and BlackRock's launch of its first tokenized money market fund, BUIDL, on Ethereum.

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