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 instance, the exchange was used for laundering the proceeds of a wire fraud scheme that had operated over a period from 2020 to about 2022. The exchange also received more than $3 million from sanctioned mixer Tornado Cash. Yet, it did not report any suspicious transactions.
U.S. Attorney Damian Williams noted that KuCoin had deliberately concealed the fact that a significant number of U.S. users were trading on its platform. Despite its size and global reach, KuCoin allegedly chose not to comply with U.S. law.
Tomiwabold OlajideAccording to the allegations outlined in the DOJ's indictment, KuCoin actively prevented its U.S. customers from identifying themselves as such. Moreover, it misled investors about its customer base. KuCoin's no-KYC policy was instrumental in ensuring user growth.
Notably, the U.S. accounted for 17% of the exchange's total customer base and nearly a fifth of traffic on the KuCoin's website.
KuCoin failed to register as a Futures Commission Merchants (FCM) with the Commodity Futures Trading Commission despite operating as a derivatives exchange. Moreover, it did not register with FinCEN as a money transmitting business.
Gan and Tang, who are both citizens of China, are now facing charges carrying a maximum sentence of five years in prison.
Tomiwabold Olajide
Yuri Molchan
Dan Burgin
Vladislav Sopov