The US government has formally accused the KuCoin cryptocurrency exchange and two of its founders of violating anti-money laundering (AML) laws.
According to the statement published on March 26 on the official website of the Department of Justice, Chun Gan and Ke Tang ignored US anti-money laundering laws "to turn KuCoin into one of the largest cryptocurrency exchanges in the world."
According to the indictment, the Seychelles (Africa)-based platform violated the US Bank Secrecy Act and the two founders have conspired to operate an unlicensed money transfer business.
“As today's indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that a substantial number of American users were trading on the platform,” said U.S. Attorney Damian Williams.
It claims that by circumventing AML policies, the platform was able to transmit more than $4 billion of “suspicious and criminal funds” and received $5 billion for operating “in the shadows of financial markets.”
It adds that Gan and Tang attempted to conceal the existence of KuCoin's American customers in order to make it appear that the company was exempt from meeting U.S. AML and KYC (anti-money laundering and know-your-customer) requirements.
“In fact, until at least July 2023, KuCoin did not require customers to provide any identifying information. It was not until that date, after they were notified of a federal criminal investigation into their activities, that KuCoin belatedly adopted a KYC program for new customers," the Department of Justice notes.
They are referring to the lawsuit against the exchange filed in 2023 by New York Attorney General Letitia James, who accused the platform of failing to register with the state before allowing investors to buy and sell cryptocurrencies.
The case was resolved late last year, after reaching a settlement in which KuCoin blocked New York users and paid a fine of USD 22 million .
For the Department of Justice, KuCoin has grown rapidly to serve more than 30 million customers. They thus take into account that the exchange is now positioned in seventh place among the largest volume exchanges in the world. It currently allows the trading of 250 digital assets .
US authorities believe that this development has occurred, "despite an alleged failure to comply with the laws necessary to ensure the security and stability of our world's digital banking infrastructure."
Based on this, they consider that "today's indictment should send a clear message to other cryptocurrency exchanges: if you plan to serve US customers, you must follow US law, plain and simple."
In defense of the platform, the KuCoin team posted a message on X. In it they indicate that they are aware of the lawsuit and are investigating the details through their lawyers.
#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 respects the laws and regulations of various countries and strictly adheres to compliance…
— KuCoin (@kucoincom) March 26, 2024
“KuCoin respects the laws and regulations of various countries and strictly adheres to compliance standards,” the writing states. They add that the platform is working well and our users' assets are absolutely safe.
