U.S. federal prosecutors have filed charges against crypto exchange KuCoin and two of its founders for alleged violations of anti-money laundering laws.
The charges include accusations that the exchange operated within the U.S. misled at least one investor about its U.S. operations, and neglected to register with U.S. government entities or establish an anti-money laundering program.
The U.S. Department of Justice, outlined in an indictment, stated that KuCoin and its founders, Chun Gan and Ke Tang, operated KuCoin as a money-transmitting business serving over 30 million customers.
However, they failed to implement a know-your-customer (KYC) or anti-money laundering (AML) program until 2023.
Moreover, their KYC program did not extend to existing customers. The Department of Justice noted that neither Gan nor Tang was arrested, as mentioned in a press release.
The DOJ indictment highlighted that KuCoin failed to register with the U.S. Financial Crimes Enforcement Network as a money services business.
Due to the absence of any know-your-customer (KYC) or anti-money laundering (AML) programs, KuCoin “allowed itself to be utilised and indeed was utilised, as a conduit for laundering the proceeds of suspicious and illicit activities, including funds from sanctions breaches, darknet marketplaces, as well as proceeds from malware, ransomware, and fraudulent schemes”, as stated in the indictment.
In the indictment, it is alleged that KuCoin “indirectly received a total of more than $3.2 million worth of cryptocurrency from Tornado Cash,” a sanctioned crypto mixer.
KuCoin’s involvement is cited in criminal filings against two developers of Tornado Cash: Alexey Pertsev, whose trial began in the Netherlands earlier on Tuesday, and Roman Storm, who is scheduled to go on trial in the U.S. later this year.
On Tuesday, the Commodity Futures Trading Commission (CFTC) lodged a lawsuit against KuCoin, alleging that the company, providing both spot and futures trading services, failed to register as a futures commission merchant, swap execution facility, or designated contract market.
The lawsuit further charged that KuCoin did not implement the CFTC’s equivalent of a know-your-customer (KYC) program.
The Commodity Futures Trading Commission (CFTC) filed a lawsuit against KuCoin on Tuesday.
The suit accuses the company, which offers both spot and futures trading services, of failing to register as a futures commission merchant, swap execution facility, or designated contract market.
Additionally, the lawsuit alleges that KuCoin did not implement the CFTC’s equivalent of a know-your-customer (KYC) program.
In a statement, U.S. Attorney Damien Williams asserted that KuCoin made deliberate efforts to conceal the fact that “significant numbers of U.S. users were engaging in trading” on its platform.
“Indeed, KuCoin allegedly leveraged its substantial U.S. customer base to establish itself as one of the leading cryptocurrency derivatives and spot exchanges globally, facilitating billions of dollars in daily trades and trillions of dollars in annual trade volume,” he stated.
“As claimed, by neglecting to implement even rudimentary anti-money laundering measures, the defendants enabled KuCoin to operate clandestinely within financial markets, serving as a conduit for illicit money laundering. KuCoin purportedly received over $5 billion and transmitted over $4 billion of suspicious and criminal funds.”
Following the announcement, KuCoin’s native token (KCS) experienced a 5% decline. Bitcoin (BTC) also saw a 1% decrease in price, although its volatility persisted throughout the day, with current trading hovering around $70,000.
Tuesday’s developments come shortly after the Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), and Treasury Department resolved comparable charges against Binance, the world’s largest cryptocurrency exchange by trading volume, just months ago.
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