US federal prosecutors announced charges against the crypto exchange KuCoin and two of its founders for allegedly violating anti-money laundering (AML) laws today (Tuesday). According to the indictment, KuCoin operated in the US without proper registration and failed to maintain an adequate AML program.

No Arrests Made despite Charges

The indictment, brought forth by the US Department of Justice (DOJ), accused KuCoin and its Founders, Chun Gan and Ke Tang, of running a money-transmitting business serving over 30 million customers without implementing a know-your-customer (KYC) or AML program until 2023. It was noted that even after the implementation of a KYC program, existing customers were not subject to its requirements. Despite these allegations, neither Gan nor Tang has been arrested, the DOJ clarified in a press release.

Furthermore, the indictment claimed that KuCoin did not register with the US Financial Crimes Enforcement Network as a money services business, as required by law. Prosecutors argue that this failure to implement adequate AML measures allowed KuCoin to be exploited for money laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term activities, including those related to sanctions violations, darknet markets, and various fraudulent schemes.

DOJ and CFTC Pursue Penalties

The indictment also alleged KuCoin's involvement in receiving cryptocurrency from Tornado Cash, a sanctioned crypto mixer, totaling over $3.2 million. This connection was highlighted in criminal filings against developers associated with Tornado Cash.

JUST IN: KuCoin exchange founders charged with conspiring to operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act by willfully failing to maintain an adequate anti-money laundering (“AML”) program 👀 pic.twitter.com/hBEnwHnUNt

— Bitcoin News (@BitcoinNewsCom) March 26, 2024

In addition to the DOJ's charges, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against KuCoin, accusing the exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term of failing to register as a futures commission merchant or implement the required KYC program. The CFTC seeks monetary penalties, trading and registration bans, as well as an injunction against KuCoin.

DOJ charges KuCoin with AML/KYC violations. Government alleges KuCoin failed to enforce KYC restrictions to block US users. The assault on VPNs has begun. pic.twitter.com/wpTRA8fn2Z

— Carlo⚖️.eth (@DeFiDefenseLaw) March 26, 2024

Both the DOJ and the CFTC are pursuing legal action against KuCoin, aiming for forfeiture and criminal penalties in the case brought forth by the DOJ and monetary penalties and regulatory measures through the CFTC's lawsuit. KuCoin has yet to publicly respond to these charges.