The US Department of Justice (DOJ) has triggered an earthquake in the crypto world, accusing the KuCoin exchange of a series of serious violations including:

- Money laundering: the DOJ claims that KuCoin allowed the transfer of as much as $4 billion between suspicious or criminal funds, exploiting the platform as a dark channel to launder dirty money. The indictment paints a disturbing picture of an exchange that deliberately ignored anti-money laundering (AML) controls and facilitated illegal activity.
Several shortcomings in AML protocols have also been identified, including failure to properly verify customers and report suspicious transactions.

- Illegal operations in the USA: KuCOin is accused of allowing American customers to access its platform without possessing the necessary licenses. The DOJ alleges that the exchange has operated illegally in the US for years by offering cryptocurrency trading services to American citizens in violation of federal laws.

- Violation of banking secrecy laws: Founders Chun Gan and Ke Tang were accused of violating banking secrecy laws in the context of transferring money without the necessary permits. The DOJ alleges that the two executives orchestrated the transfer of illicit funds through a complex triangulation scheme involving several offshore companies.

- KYC non-compliance: KuCoin is accused of delaying the introduction of KYC verification measures (in 2021) hampering efforts to identify and track illegal money flows. The late implementation made the exchange a fertile ground for criminal activity, providing an anonymous environment for money laundering and other illicit activities.

What will happen to the exchange?

Let's start talking about one of the previous ones, the most recent. In 2023 the exchange had to pay $22 million to the state of New York and stop operations for failing to comply with local laws.

There are different possible solutions, the most likely, provided that the accusations do not turn out to be much worse, is the path taken by Binance.us, i.e. the dismissal of the executives involved, the payment of severe fines and the request for the licenses necessary to operate legally In the USA.

Confidence in the exchange is collapsing among many investors and customers. Considering the serious allegations, it is no longer so obvious that the DOJ is willing to settle with KuCOin.

There are two possible outcomes:

Surviving, Kucoin will be able to resolve disputes and strengthen compliance protocols

Liquidation, if the DOJ charges are too severe, KuCoin may be forced to liquidate its assets and close its doors.

One final worrying observation: KuCoin finds itself in the top 5 exchanges for volumes in the last 24 hours. The latest news and possible outcomes could give a jolt to the crypto market, in the meantime KuCoin's KCS token has already lost around 15% in just 3 hours since the news came out.

Below is a short post on KuCoin's official X account mentioning it
"KuCoin is operating well and the assets of our users are absolutely safe. We are aware of the related reports and we are currently investigating the details through our lawyers. KuCoin respects the laws and regulations of various countries and strictly adheres to compliance standards"

https://twitter.com/kucoincom/status/1772649807972315170

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