On March 26, the US Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) simultaneously announced civil and criminal charges against the cryptocurrency exchange KuCoin and its two founders established, due to violation of US law.
Accordingly, the DOJ accused KuCoin of operating as an unlicensed money transfer business, failing to adequately implement anti-money laundering (AML) and identity verification (KYC) programs. The exchange received more than $5 billion and sent more than $4 billion “suspicious funds and criminal proceeds.”
DOJ also accuses KuCoin of allowing its platform to be used to launder money originating from criminals, including proceeds from darknet markets, malware, ransomware, and fraud schemes .
The two founders of KuCoin, Chun Gan and Ke Tang, were charged with conspiring to violate the Bank Security Act and operating an unlicensed money transfer business.
Besides, the CFTC filed a civil lawsuit against KuCoin, accusing the exchange of “repeated violations of the Commodity Exchanges Act (CEA) and CFTC regulations.”
“Cryptocurrency exchanges like KuCoin cannot both want to serve American customers and ignore American law,” said U.S. Attorney for the Southern District of New York Williams in a statement. “Today’s indictment is a clear warning to other cryptocurrency exchanges: if you want to serve American customers, you must follow American law, plain and simple.”
The legal actions are part of a growing effort by US authorities to crack down on financial crime in the cryptocurrency industry. Also highlights the importance of AML/KYC compliance by exchanges.
KuCoin, founded in 2017 in Seychelles, is one of the world's largest cryptocurrency platforms, with more than 30 million customers and billions of dollars in daily trading volume. The exchange offers many different types of cryptocurrency trading services.
KuCoin has not yet commented on the indictment. The case is expected to go to trial in the Southern District Court of New York.