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Breaking: KuCoin and Its Founders Hit with Criminal Charges in US

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Tue, 26/03/2024 - 15:02
Breaking: KuCoin and Its Founders Hit with Criminal Charges in US
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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. 

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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.

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According 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.

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