KEY POINTS
- Authorities say KuCoin 'deliberately' concealed the fact that it had a 'substantial' number of US users
- The exchange allegedly facilitated some $9 billion in flows of 'suspicious and criminal funds'
- KuCoin said Tuesday that it respects the laws and regulations of various jurisdictions
Cryptocurrency exchange KuCoin and two of its founders have been charged by the U.S. Department of Justice (DOJ) with operating an unregistered business and "conspiring" to violate anti-money laundering (AML) laws.
KuCoin and two of its founders, Chinese citizens Chun Gan, 34, and Ke Tang, 39, who "remain at large," were aware of their AML obligations under American law, but "willfully chose to flout those requirements," the DOJ said as it unsealed an indictment against the crypto giant Tuesday.
"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," said U.S. Attorney for the Southern District of New York Damian Williams.
Due to its failure to implement "even basic" AML policies, KuCoin and the charged founders allowed the platform to "be used as a haven for illicit money laundering." The platform facilitated over $5 billion in inflows and over $4 billion in outflows of "suspicious and criminal funds," Williams said.
The DOJ went on to accuse KuCoin, Gan, and Tang of attempting to conceal the existence of its American users to make it appear as if the platform was not under AML and know-your-customer (KYC) processing, a process that verifies the identity of customers.
Gan and Tang are each charged with one count of conspiring to violate the Bank Secrecy Act and one count of conspiring to operate an unlicensed money transmitting business. They face a maximum of five years in prison.
A few hours after the indictment's unsealing, KuCoin took to X (formerly Twitter), saying it was aware of "related reports" but did not provide further details. "KuCoin is operating well, and the assets of our users are safe," it wrote. It also said the exchange was investigating the details of such reports through its lawyers. "KuCoin respect the laws and regulations of various countries and strictly adheres to compliance standards," it said.
#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
KuCoin updated its standard KYC process in mid-2023, saying new users will be required to provide their identity information as well as a face recognition procedure. At the time, it said the improved KYC system should "strengthen compliance with relevant laws and regulations" and help the exchange combat illicit activities such as terror financing and AML operations.
