US federal prosecutors charged cryptocurrency exchange KuCoin and two of its founders with violating anti-money laundering laws on Tuesday, saying the exchange operated in the United States, lied to at least one of its investors about operating in the United States and failed to register with the United States. Government agencies and maintaining the anti-money laundering program.
The US Department of Justice said in the indictment that KuCoin and its founders Chun Gan and Ke Tang ran KuCoin as a money transfer business with more than 30 million customers, but did not implement a know-your-customer or anti-money laundering program until 2023 — and even then, its KYC program… Not applicable to existing customers. Neither Gan nor Tang have been arrested, the Justice Department said in a press release.
The Justice Department indictment said KuCoin did not register with the US Financial Crimes Enforcement Network as a financial services company.
Because it did not implement any KYC or AML programs, KuCoin made itself available for use, and in fact was used as a means to launder the proceeds of suspicious and criminal activity, including proceeds from sanctions violations, darknet markets, and malware. ransomware and fraud schemes, the indictment said.
The Commodity Futures Trading Commission also filed suit against KuCoin on Tuesday, alleging that the company, which offers spot and futures trading services, did not register as a futures commission dealer, swap execution facility or designated contract market. The lawsuit also charged that KuCoin did not implement the equivalent of the CFTC's KYC program.
In a statement, Homeland Security Investigations Special Agent in Charge Darren McCormack described KuCoin as an “alleged multibillion-dollar criminal conspiracy,” noting that it was one of the largest cryptocurrency exchanges.
US Attorney Damien Williams said in a statement that KuCoin tried hard to hide that “large numbers of US users were trading” on its platform.
“In fact, KuCoin has allegedly leveraged its large US customer base to become one of the largest cryptocurrency derivatives and spot exchanges in the world, with billions of dollars in daily trades and trillions of dollars in annual trade volume,” he said. “..As alleged, in failing to implement even basic anti-money laundering policies, Defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven to launder illicit funds, with KuCoin receiving over $5 billion and sending over $4 billion in funds.” suspicious and criminal.
KuCoin's native token (KCS) fell 5% following the announcement. Bitcoin (BTC) price is down 1%, but has been volatile throughout the day and is trading around $70,000.
Updated (26 March 2024, 15:25 UTC): Adds additional details.
