KuCoin and Founders Face US Prosecution over Alleged AML Violations

Tuesday, 26/03/2024 | 16:16 GMT by Tareq Sikder

The firm served 30 million customers without KYC or AML programs until 2023.

The indictment has alleged that over $3.2 million in crypto was received from Tornado Cash.

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 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.

In addition to the DOJ's charges, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against KuCoin, accusing the exchange 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.

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.