US DOJ Charges KuCoin and Founders with Money Laundering and Banking Law Violations

The US Department of Justice (DOJ) has charged crypto exchange KuCoin and two co-founders with money laundering violations and operating an unlicensed money transmitting business. The exchange has also been sued by the Commodity Futures Trading Commission (CFTC) for operating an illegal crypto derivatives trading platform. The news caused a sharp drop in the price of KCS, the native KuCoin token.

KuCoin and Its Founders Charged with Money Laundering by US Justice Department

Was KuCoin Operating Unlicensed and Violating Banking Laws?

The US Justice Department has taken action against KuCoin and two of its founders, alleging they operated an unlicensed money transmitting business and violated the Bank Secrecy Act. According to an indictment unsealed on Tuesday, March 26, Chun Gan and Ke Tang are accused of knowingly concealing a substantial number of US users trading on KuCoin's platform to avoid compliance with US anti-money laundering laws.

Damian Williams, US Attorney for the Southern District of New York, stated, "As today's Indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin's platform."

Williams further noted that "KuCoin allegedly took advantage of its sizeable US customer base to become one of the world's largest cryptocurrency derivatives and spot exchanges with billions of dollars of daily trades and trillions of dollars of annual trade volume."

Did KuCoin Illegally Operate a Crypto Derivatives Trading Platform?

In addition to the DOJ's criminal charges, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against KuCoin, alleging that it illegally operated a crypto derivatives trading platform. The CFTC alleges that the exchange offered commodity futures, swaps, and other commodity-related services without the commission's approval.

KuCoin Faces Scrutiny After Similar Actions Against Other Exchanges

KuCoin is not the first crypto exchange to face legal challenges in the US. Notably, Binance reached a $4.3 billion settlement with US regulators for similar violations, and the former Binance CEO, Changpeng Zhao, pleaded guilty to charges and is scheduled for sentencing on April 30.

KuCoin's Price Falls Sharply in Response to News

Following the news of the DOJ charges, the price of KCS, KuCoin's native token, dropped significantly. At the time of writing, KCS traded around $12.6, a notable decline from its recent high of $14.50.

KuCoin Assures Users of Safety

KuCoin issued a statement shortly after the news release, assuring users that their assets were safe. However, the company also acknowledged awareness of the reports and is conducting its own investigation through legal counsel.

KuCoin's statement reads: "#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."

Conclusion

The charges against KuCoin and its founders have raised concerns about the exchange's operations and compliance with US regulations. The legal challenges add to the growing scrutiny faced by the cryptocurrency industry from regulatory agencies worldwide. It remains to be seen how KuCoin will respond to these allegations and the potential impact on its business.