Authorities claim that KuCoin flouted U.S. anti-money laundering laws in pursuit of growth.
KuCoin, a prominent global cryptocurrency exchange, and two of its founders face criminal charges from U.S. authorities, sparking concerns over the safety of user funds held on the platform.
Chun Gan and Ke Tang are the two founders facing charges. They are accused of conspiring to operate an unlicensed money transmission business and violating the Bank Secrecy Act by willfully failing to maintain an adequate anti-money laundering (AML) program. Authorities allege that under their leadership, KuCoin flouted U.S. AML laws to become one of the world’s largest cryptocurrency exchanges.
Kucoin ranks fifth by trading volume among centralized exchanges, according to Coingecko, and processed over $2 billion of trades in the past 24 hours.
U.S. Attorney Damian Williams emphasized that while KuCoin utilized its significant U.S. customer base to become a major player in the cryptocurrency market, it deliberately chose to disregard U.S. laws.
“Crypto exchanges like KuCoin cannot have it both ways. Today’s indictment should send a clear message to other crypto exchanges: if you plan to serve U.S. customers, you must follow U.S. law, plain and simple,” he said.
Authorities said their investigation revealed that KuCoin, which was founded in 2017, grew rapidly and attracted over 30 million customers. However, despite its rapid success, KuCoin allegedly failed to implement basic anti-money laundering policies.
It’s also alleged that KuCoin actively attempted to hide the existence of its U.S. customers to evade U.S. AML and KYC requirements, allowing the exchange to be used as a platform for money laundering and criminal activities.
While Gan and Tang remain at large, the charges against them include one count of conspiring to violate the Bank Secrecy Act and one count of conspiring to operate an unlicensed money-transmitting business, with a maximum sentence of five years in prison. The corporate entities behind KuCoin, including Flashdot Limited, Peken Global Limited, and Phoenixfin Private Limited, are also facing similar charges.
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