Federal Prosecutors Indict KuCoin for AML Violations, CFTC Files Civil Suit

Federal prosecutors charged KuCoin, a major cryptocurrency exchange, for violating anti-money laundering laws. KuCoin failed to vet customers, allowing illicit funds transfers since 2017. Prosecutors allege KuCoin, based in Seychelles, sought US customers without registering with the Treasury Department or verifying identities. Exchange founders Chun Gan and Ke Tang are charged with conspiracy and remain at large.

Federal Prosecutors Charge KuCoin with Anti-Money Laundering Violations

In a significant development, federal prosecutors in Manhattan have indicted KuCoin, a major global cryptocurrency exchange, for alleged violations of anti-money laundering (AML) laws. The indictment, unsealed on Tuesday, asserts that KuCoin failed to implement adequate customer vetting procedures, facilitating the transfer of billions of dollars in illicit funds since its establishment in 2017.

According to the prosecutors, KuCoin actively pursued US customers despite failing to register with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) and establish necessary identity verification processes. This omission allegedly enabled the exchange to evade regulatory scrutiny and facilitate potentially illicit transactions.

The Justice Department specifically charged KuCoin's Seychelles-based founders, Chun Gan and Ke Tang, with conspiracy. Both individuals remain at large as of the indictment.

Separate Civil Lawsuit Filed

In a related action, the US Commodity Futures Trading Commission (CFTC) has filed a separate civil lawsuit against KuCoin. The CFTC alleges that the exchange failed to register its futures and swaps activities with the regulatory agency, violating federal law.

KuCoin's Response

KuCoin has since issued a statement on social media, assuring customers that their assets remain secure and that it is reviewing the allegations. The exchange reiterated its commitment to compliance and adherence to legal requirements in various jurisdictions.

New York Settlement

It is noteworthy that KuCoin had previously settled a lawsuit brought by the New York Attorney General's office in December. Under the agreement, KuCoin agreed to block New York users from its platform and pay $22 million for allegedly failing to register as a money transmitter in the state.

Industry Ranking

Data from CoinMarketCap, a cryptocurrency market data provider, indicates that KuCoin ranks below Binance, Coinbase, and Kraken in terms of trading volumes, liquidity, and overall traffic. The exchange is reportedly considering measures to enhance its regulatory compliance and regain trust among investors.

Significance of Charges

The indictment of KuCoin represents a significant escalation in regulatory scrutiny of the cryptocurrency industry. It underscores the heightened focus of law enforcement agencies on combating money laundering and illegal financing through digital assets. The case is expected to set a precedent for future enforcement actions against virtual currency exchanges and their operators.