Justice Department Charges KuCoin with Anti-Money Laundering Violations

The Justice Department has charged cryptocurrency exchange KuCoin and its founders with violating anti-money laundering laws. Prosecutors allege that KuCoin founders Chun Gan and Ke Tang conspired to operate an unlicensed money-transmitting business and violated the Bank Secrecy Act by failing to maintain an adequate anti-money-laundering program. The indictment alleges KuCoin and the founders deliberately concealed U.S. user trading activity, aiding its rise to a major cryptocurrency exchange without basic anti-money-laundering policies.

Justice Department Charges KuCoin with Anti-Money Laundering Violations

In an unsealed indictment unveiled on Tuesday, the United States Department of Justice (DOJ) accused the cryptocurrency exchange KuCoin and its two founders, Chun Gan and Ke Tang, of contravening anti-money laundering (AML) laws.

Federal prosecutors allege that the founders conspired to operate KuCoin as an illicit money transmitter and breached the Bank Secrecy Act (BSA) by neglecting to implement sufficient AML measures, rendering the exchange susceptible to money laundering and terrorist financing activities.

In a statement, KuCoin representatives acknowledged the charges and expressed their intention to meticulously review them alongside legal counsel.

"While we actively engage with this matter, our platform remains unaffected and continues to operate seamlessly as usual," asserted Johnny Lyu, KuCoin's Chief Executive Officer, via a post on X, formerly known as Twitter.

According to the indictment, KuCoin and its founders deliberately concealed the extensive participation of U.S. users on their platform, facilitating its rise as one of the world's prominent cryptocurrency derivatives and spot exchanges without ever establishing fundamental AML safeguards.

The government maintains that KuCoin has processed over $5 billion and facilitated the transfer of more than $4 billion in illicit and dubious funds since its inception in 2017. Furthermore, the allegations assert that the founders and the exchange disregarded essential procedures for verifying customer identities and failed to report suspicious activities.

At the time of the indictment, the DOJ had not taken the founders into custody.

Concurrently with the Justice Department's action, the Commodity Futures Trading Commission (CFTC) initiated a parallel civil lawsuit against KuCoin and its founders on Tuesday, alleging violations of trader regulations and the BSA.

Please direct correspondence to Dean Seal at dean.seal@wsj.com.