Key Takeaways:
- The U.S. Justice Department charged KuCoin and its founders, Chun Gan and Ke Tang, with operating an unlicensed money transmission business and violating the Bank Secrecy Act (BSA) by failing to implement an adequate Anti-Money Laundering (AML) program.
- KuCoin is accused of facilitating money laundering and terrorist financing due to its insufficient AML measures, with the platform allegedly being used to launder over $9 billion in suspicious transactions.
- The charges are part of broader efforts by U.S. authorities to regulate the crypto market, following similar legal actions against other major crypto exchanges and executives, highlighting the increasing scrutiny on cryptocurrency operations within the U.S.
The United States Justice Department has taken decisive action against cryptocurrency exchange KuCoin and its two founders, Chun Gan and Ke Tang, by unveiling charges on March 26.
This legal move targets the founders and the platform for allegedly operating without a proper license for money transmission and failing to adhere to the Bank Secrecy Act (BSA) standards.
US prosecutors charged KuCoin, one of the world’s largest cryptocurrency exchanges, and two of its founders for failing to comply with American anti-money laundering rules. https://t.co/3dPa2JAOfn
— Bloomberg Crypto (@crypto) March 27, 2024
According to the indictment, Gan and Tang are accused of not maintaining an adequate Anti-Money Laundering (AML) program on the KuCoin platform.
This oversight purportedly made KuCoin a conduit for money laundering and terrorist financing activities.
Specifically, the charges highlight that KuCoin functioned as an unlicensed money-transmitting business and breached BSA regulations.
Damian Williams, a U.S. Attorney, underscored the allegations by noting that KuCoin and its founders intentionally obscured the significant presence of U.S. traders on their platform.
By doing so, KuCoin capitalized on its large American customer base to emerge as a major player in the global cryptocurrency market, facilitating billions in daily transactions and achieving an annual trade volume in the trillions.
The failure to establish basic AML policies has led to criticism that KuCoin served as a shadowy figure in the financial marketplace, offering refuge for the laundering of illicit funds.
This indictment coincides with a separate civil enforcement action by the U.S. Commodity Futures Trading Commission (CFTC), which, on the same day, accused KuCoin of several breaches of the Commodity Exchange Act (CEA) and CFTC regulations.
The Justice Department’s investigation revealed that KuCoin was involved in transactions totaling over $9 billion, flagged as suspicious or criminal.
KuCoin, established in 2017 by Gan and Tang, is headquartered in Seychelles.
#KuCoin is operating well, and the assets of our users are absolutely safe. We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respect the laws and regulations of various countries and strictly adheres to compliance…
— KuCoin (@kucoincom) March 26, 2024
Despite their Chinese nationality, both founders were not in custody at the time the charges were made public.
The U.S. has a history of pursuing legal actions against crypto exchanges and their executives who engage in business within its borders, as seen with other high-profile cases involving executives from FTX and Binance.
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