KuCoin faces federal prosecution for AML and registration skirting

Federal prosecutors in New York announced charges against KuCoin, a leading cryptocurrency exchange, for breaching U.S. anti-money laundering laws on Tuesday (Mar. 26).

The charges accuse the Seychelles-based company of neglecting to properly vet its customers, which allegedly allowed for the transfer of billions in illicit funds since its inception in 2017. The prosecutors argue that KuCoin unlawfully courted business from American clients without the necessary registration with the Treasury Department or the implementation of required client identity verification procedures in compliance with U.S. laws.

KuCoin responded to the allegations on the social media platform X, assuring its customers that their assets are secure and that its legal team is addressing the claims. The company emphasized its commitment to complying with the laws and regulatory standards of various countries.

#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

Further compounding KuCoin’s legal troubles, the exchange’s founders, Chun Gan and Ke Tang, both Chinese nationals aged 34 and 39 respectively, have been charged with conspiracy and are currently evading capture. According to a press release published by U.S.’s Attorney Office of the Southern District of New York:

GAN, 34, and TANG, 39, both citizens of China, 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, each of which carries a maximum sentence of five years in prison.

In a separate legal development, the U.S. Commodity Futures Trading Commission (CFTC) has initiated a civil lawsuit against KuCoin. This lawsuit alleges the company failed to register its futures and swaps activities with the regulatory body.

This legal action follows a December settlement in which KuCoin agreed to prohibit New York residents from using its platform and to pay $22 million to resolve a lawsuit from the state. The exchange is accused of having operated within the United States without license.

United States regulators are pushing another wave of actions against players in the cryptocurrency industry. As ReadWrite reported earlier this week, the U.S. Securities and Exchange Commission (SEC) has approached a judge in New York, seeking to impose a penalty close to $2 billion on Ripple Labs.

Early Ethereum (ETH) advisor Steven Nerayoff has also recently expressed serious concerns over the investigation of Ethereum by the U.S. Securities and Exchange Commission (SEC).

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