Cryptocurrency exchange KuCoin and two of its founders (Chun Gan and Ke Tang) have been hit with criminal charges by the United States Department of Justice.
Cryptocurrency exchange KuCoin and two of its founders (Chun Gan and Ke Tang) have been hit with criminal charges by the United States Department of Justice.
The indictment alleges that KuCoin and its founders violated the Bank Secrecy Act by failing to maintain an adequate anti-money laundering (AML) program. This allowed KuCoin to serve as “a haven for illicit money laundering.” For example, the exchange was used to launder proceeds from a wire fraud scheme that had operated over a period from 2020 to approximately 2022. The exchange also received more than $3 million from sanctioned mixer Tornado Cash. However, it did not report any suspicious transactions.
US Attorney Damian Williams noted that KuCoin had deliberately concealed the fact that a significant number of US users operated on its platform. Despite its size and global reach, KuCoin allegedly decided not to comply with US law.
According to the allegations outlined in the Justice Department’s indictment, KuCoin actively prevented its American customers from identifying themselves as such. Additionally, it misled investors about its customer base. KuCoin’s no-KYC policy was instrumental in ensuring user growth.
Notably, the US accounted for 17% of the exchange’s total customer base and almost a fifth of the traffic on KuCoin’s website.
KuCoin was not registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission despite operating as a derivatives exchange. Additionally, it did not register with FinCEN as a money transfer company.
Gan and Tang, both citizens of China, now face charges that carry a maximum sentence of five years in prison.
