‘Haven For Illicit Money-Laundering’ – DoJ Charges Crypto Exchange KuCoin Over Billions In Criminal Funds

United States Justice Department (DoJ) officials unsealed an indictment against cryptocurrency exchange KuCoin and two of its founders for “conspiring to operate an unlicensed money transmitting business” and violations of the Bank Secrecy Act.

As CoinDesk reports, the DoJ said in an indictment that KuCoin and founders Chun Gan and Ke Tang operated KuCoin as a money-transmitting business with over 30 million customers but did not implement a know-your-customer (KYC) or AML program until 2023 – and even then, its KYC program did not apply to existing customers.

Neither Gan nor Tang were arrested, the DOJ said in a press release.

U.S. Attorney Damian Williams said:

“As today’s Indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform. 

Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.  But financial institutions like KuCoin that take advantage of the unique opportunities available in the United States must also comply with U.S. law to help identify and drive out crime and corrupt financing schemes.  KuCoin allegedly deliberately chose not to do so. 

As alleged, in failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds. 

Crypto exchanges like KuCoin cannot have it both ways.  Today’s Indictment should send a clear message to other crypto exchanges: if you plan to serve U.S. customers, you must follow U.S. law, plain and simple.”

The Commodity Futures Trading Commission also filed a suit against KuCoin Tuesday, alleging the company, which offers both spot and futures trading services, did not register as a futures commission merchant, swap execution facility or designated contract market. Its suit also charged that KuCoin didn’t implement the CFTC’s equivalent of a KYC program.

With bitcoin having reached up to new record highs, it is worth noting today’s action marks the first time that the DOJ has targeted a crypto exchange since it announced a multi-billion dollar settlement with Binance late last year, perhaps in a refreshed playbook to spread FUD back into the crypto ecosystem.

Finally, KuCoin claims that its users’ assets are safe amid the series of criminal and civil allegations:

“KuCoin is operating well, and the assets of our users are absolutely safe,” the exchange wrote.

“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 standards.”

At the same time, KuCoin’s native token, KCS, has lost 12% of its value over the past 24 hours and is currently trading at $12.64 at the time of publication.