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KuCoin

KuCoin Charged By DOJ As ‘Money Laundering Hub’ In Alleged $9B Scheme

Ronaldo Marquez
by Ronaldo Marquez
1 year ago
·
Posted in Breaking News Ticker
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

In a significant development, federal prosecutors in the United States have charged cryptocurrency exchange KuCoin and two of its founders with violating anti-money laundering (AML) laws.

Founders Face DOJ Charges 

The US Department of Justice (DOJ) unsealed an indictment against KuCoin and its founders, Chun Gan (also known as “Michael”) and Ke Tang (also known as “Eric”), for their alleged involvement in conspiring to operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act. 

The indictment accuses them of “willfully” failing to maintain an effective AML program designed to prevent money laundering and terrorist financing.

Related Reading: Shiba Inu Held On Exchanges Falls To 2-Year Low, What This Means

According to Damian Williams, the United States Attorney for the Southern District of New York, KuCoin deliberately concealed the fact that a significant number of its users were trading on its platform, and allegedly taking advantage of its US customer base to become one of the world’s largest cryptocurrency exchanges. 

However, the defendants allegedly failed to comply with US laws, including basic AML policies, allowing KuCoin to operate as a “hub for illicit money laundering.” The indictment claims that KuCoin received over $5 billion and sent over $4 billion of suspicious and criminal funds.

The investigation further claims that KuCoin, founded in September 2017 by Chun Gan and Ke Tang, actively solicited business from US customers through its spot and futures trading platforms.

Despite its growth, with over 30 million customers and significant daily trading volume, the DOJ alleges that KuCoin evaded AML obligations required for money transmitting businesses, including registration with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and the US Commodity and Futures Trading Commission (CFTC).

KuCoin Accused Of Evading AML And KYC Requirements

The indictment further alleges that KuCoin, Gan, and Tang were aware of their AML obligations but deliberately chose to disregard them. According to the DOJ’s investigations, until July 2023, KuCoin had no customer identification requirements in place, implementing a belated KYC (know-your-customer) program only after being notified of the federal investigation. 

However, the prosecution contends that this program applied solely to new customers, leaving millions of existing customers, including a significant number in the United States, unchecked. 

The indictment also accuses Gan, Tang, and KuCoin of “actively” concealing the existence of US customers in an attempt to evade AML and KYC requirements. In its announcement, the DOJ claimed that KuCoin prevented its US customers from identifying themselves as such during the account registration process. 

Related Reading: Bitcoin Whale Profits Soar To $16.3 Billion Despite Mixed Spot BTC ETF Flows

If convicted, Gan and Tang, both Chinese citizens, could face a maximum sentence of five years in prison for each count of conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money transmitting business.

KuCoin
KCS’s price drop in the past hour on the daily chart. Source: KCSUSD on TradingView.com

As of the current update, the native token of the exchange, KCS, has experienced a substantial impact following the disclosure of the news and the charges brought by the DOJ. At present, the KCS token is trading at $12.76, reflecting a significant decrease of 10% within a mere one-hour timeframe.

Featured image from Shutterstock, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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