➡️ The #SEC 's chief accountant, Paul Munter, stated that auditing firms may be held liable when assessing the finances of crypto businesses.

➡️ Specifically, Paul Munter recalled the crashes and payment crises of many crypto projects over the past year. Therefore, he said that the audit unit has become a new concern of projects, especially at exchanges, to build trust with users.

➡️ Munter argues that audit firms may be held liable for statements made to clients. Under anti-fraud laws, an auditor must not mislead a client about the extent of financial judgment or the “scope of work” performed by an accounting firm.

➡️ In addition, he warned that anyone knowingly or unknowingly assisting another in violation of a Securities Act or Exchange Act provision would be deemed to be in violation of that provision. In response, SEC Commissioner Hester Peirce concurred that crypto platforms and accounting firms need to clarify what Proof-of-Reserves is and the limitations of this audit report. However, she criticized Munter's proposal as limiting efforts to make the crypto market transparent.

➡️ In the wake of recent cryptocurrency scandals and payment problems, the market is gradually seeking credibility from audit firms, especially exchanges, when they need to prove themselves. transparency on asset holding. Some cryptocurrency exchanges and other companies advertise that they are fully audited by third-party companies, usually accounting firms like Mazars.

➡️ Besides, many exchanges have published proof of holding customer assets, also known as Proof-of-Reserves (PoR). The top three exchanges participating in this program, Binance, #KuCoin and #crypto.com , have partnered with French auditing firm Mazars, and the published results all show asset reserve ratios of 100% or more. .

➡️ However, many analysts, legal consultants, and user communities have criticized Mazars' audits as being very superficial, most of which are based solely on data provided by the exchange and not independently researched. . Paul Munter also made a statement that proof of a PoR reserve should not be fully trusted.

➡️ Mazars has faced strong criticism and is no longer providing audit services for crypto exchanges, removing the report from their website by the end of 2022.

➡️ After that, the auditing firm Armanino also announced to stop cooperating with #ftx .us and Kraken. Efforts to find an audit partner for Binance have also been difficult, and even major auditing firms (Big4) have refused to cooperate with #Binance .

$BTC $ETH $BNB

The CFTC and SEC are at it again, this time focusing on KuCoin. Caroline Pham from the CFTC hinted that their actions might upset the SEC.
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Despite expectations of regulatory harmony, tensions are evident. The CFTC, overseeing commodity derivatives, hit KuCoin with numerous charges under the Commodity Exchange Act (CEA) and CFTC regulations, alongside criminal charges from the U.S. Justice Department. All this unfolded on March 26, making it a tough day for KuCoin.

Regulatory Dispute: CFTC vs. SEC
Caroline Pham of the CFTC didn’t hold back, suggesting that the CFTC’s recent actions might blur the line between securities and non-securities. She emphasized that trading derivatives doesn’t equate to owning underlying shares, a crucial distinction that delineates the CFTC’s jurisdiction from the SEC’s.
Beyond a regulatory spat, this conflict delves into the core understanding of financial instruments and activities. Historically, the U.S. maintained a clear division between securities and commodities. However, the emergence of cryptocurrencies has complicated matters. Ethereum, for instance, stands at the center of this debate: Is it a commodity or a security? While the CFTC leans towards the former, if the SEC determines it’s the latter, the crypto market, particularly spot Ether exchange-traded fund applications, could face significant repercussions.

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KuCoin Faces Regulatory Storm
Business as Usual: Despite facing regulatory allegations, KuCoin maintained a bold stance, reassuring users that their assets remained secure. Their audacity was evident when they tweeted about discovering “100x CryptoGems” on their platform amid the legal turmoil, demonstrating a remarkable level of composure.
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Serious Charges: However, the gravity of the situation cannot be overlooked. KuCoin’s co-founders, Chun Gan and Ke Tang, are under fire from the U.S. SDNY, accused of operating an unlicensed money-transmitting business and evading anti-money laundering laws. Adding to the complexity is KuCoin’s alleged no-KYC (Know Your Customer) policy, purportedly pivotal to its growth, facilitating over $9 billion in suspicious transactions. It appears that KuCoin was indifferent to regulatory compliance.

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Regulatory Oversight: From roughly mid-2019 to mid-2023, KuCoin allegedly conducted transactions that should have triggered oversight from the CFTC. However, according to charges, they neglected IP verification to block U.S. users. This negligence, or possibly deliberate oversight, has drawn the ire of U.S. regulators, placing KuCoin under intense scrutiny.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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#SEC  #KuCoin  #CFTC  #Altcoin  #Cryptocurrency $BTC $ETH $SOL

The U.S. Attorney’s Office for the Southern District of New York, together with Homeland Security Investigations (HSI), revealed charges against global cryptocurrency exchange KuCoin and two of its founders, Chun Gan (also known as “Michael”) and Ke Tang (also known as “Eric”).
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These charges, announced in a press release on March 26, 2027, involve serious violations of U.S. financial regulations. The accusations include operating a money-transmitting business without a license and failing to comply with the Bank Secrecy Act. Specifically, the indictment alleges that KuCoin did not maintain an adequate anti-money laundering (AML) program.

U.S. Attorney Highlights KuCoin’s Alleged Wrongdoing
U.S. Attorney Damian Williams emphasized KuCoin and its founders’ deliberate actions to hide the participation of U.S. users on their platform. By leveraging this significant customer base, KuCoin reportedly expanded into one of the world’s largest cryptocurrency exchanges.
The absence of fundamental anti-money laundering (AML) policies, as stated in the press release, allegedly allowed KuCoin to become a conduit for illegal money laundering activities, involving more than $9 billion of suspicious and criminal funds.

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The press release provided insights into KuCoin’s operational framework, revealing purported disregard for U.S. legal obligations by Gan, Tang, and KuCoin. Allegations include the absence of a robust Know Your Customer (KYC) program until July 2023, failure to file suspicious activity reports, and failure to register with relevant U.S. regulatory bodies. These purported actions are said to demonstrate KuCoin’s systematic avoidance of U.S. anti-money laundering and customer identification protocols.
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KuCoin Accused of Masking U.S. Customer Base
The press release highlighted KuCoin’s active efforts to conceal its U.S. customer base, which included measures to prevent users from disclosing their location when creating accounts. Additionally, KuCoin allegedly misled investors about the geographical distribution of its customer base. These actions, deemed deceitful, were reportedly crucial to KuCoin’s strategy in attracting users seeking anonymity.

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The indictment against KuCoin, its founders, and associated entities represents a significant development in the regulation of cryptocurrency exchanges operating within and targeting the U.S. market. The charges carry substantial penalties, with individuals facing up to five years in prison for each count of conspiring to operate an unlicensed money-transmitting business and violating the Bank Secrecy Act. The entities collectively known as KuCoin face potentially harsher penalties across multiple charges.
U.S. Attorney Condemns KuCoin’s Alleged Wrongdoings
Concealment of U.S. User Base: U.S. Attorney Damian Williams emphasized KuCoin’s alleged deliberate attempts to hide the presence of significant numbers of U.S. users on its platform. KuCoin purportedly capitalized on its sizable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars in daily trades and trillions of dollars in annual trade volume. However, Williams stressed that financial institutions operating in the U.S. must adhere to U.S. law to combat crime and corruption.

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Failure to Implement AML Policies: According to Williams, KuCoin allegedly chose not to implement even basic anti-money laundering (AML) policies. This failure purportedly allowed KuCoin to operate in the shadows of financial markets and be utilized as a haven for illicit money laundering. The indictment claims that KuCoin received over $5 billion and sent over $4 billion of suspicious and criminal funds.
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Clear Message to Crypto Exchanges: Williams stated that crypto exchanges like KuCoin cannot simultaneously benefit from serving U.S. customers while disregarding U.S. law. The indictment serves as a clear message to other crypto exchanges that if they intend to serve U.S. customers, they must comply with U.S. law without exception.
On-Chain Analysis by CryptoQuant CEO: In contrast, Ki Young Ju, founder and CEO of South Korea-based crypto analytics startup CryptoQuant, offered a different perspective, stating that “on-chain wise,” KuCoin is doing okay.
On-chain wise, @kucoincom is fine.$BTC and $ETH withdrawals surged, driven mainly by retail users, with a small impact on the overall reserve.They appear to not commingle customers' funds and have sufficient reserves to process user withdrawals. pic.twitter.com/p4bJJpwnFJ— Ki Young Ju (@ki_young_ju) March 27, 2024

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Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#KuCoin #Altcoin #Cryptocurrency #CryptoNews #KCS