The U.S. Attorney’s Office for the Southern District of New York, in conjunction with Homeland Security Investigations (HSI), has announced the unsealing of an indictment against global cryptocurrency exchange KuCoin and two of its founders, Chun Gan (also known as “Michael”) and Ke Tang (also known as “Eric”), for serious violations of U.S. financial regulations. As per the press release issued on 26 March 2027, the charges against the individuals and the entity include operating an unlicensed money-transmitting business and failing to comply with the Bank Secrecy Act, particularly in maintaining an adequate anti-money laundering (AML) program.
U.S. Attorney Damian Williams highlighted the deliberate actions by KuCoin and its founders to conceal the involvement of U.S. users on their platform, leveraging this substantial customer base to grow into one of the world’s largest cryptocurrency exchanges. The absence of basic anti-money laundering policies, according to the press release, facilitated KuCoin’s emergence as a channel for illicit money laundering, involving over $9 billion of suspicious and criminal funds.
The press release further detailed KuCoin’s operational framework, revealing that despite knowing their obligations under U.S. law, Gan, Tang, and KuCoin allegedly chose to disregard these requirements blatantly. It went on to say that the lack of an adequate KYC (Know Your Customer) program until July 2023, the non-existence of filed suspicious activity reports, and the failure to register with relevant U.S. regulatory bodies exemplify KuCoin’s systemic avoidance of U.S. anti-money laundering and customer identification protocols.
The press release also mentioned that the indictment illuminates KuCoin’s efforts to mask its U.S. customer base actively, saying that this includes preventing U.S. users from disclosing their location when creating accounts and misleading investors about the geographic distribution of its customer base. Such actions were not only deceitful but also integral to KuCoin’s strategy to attract users seeking anonymity, as highlighted in the press release from the U.S. Attorney’s Office.
The legal action against KuCoin, its founders, and associated entities marks a critical moment in the regulation of cryptocurrency exchanges operating within and catering to the U.S. market. The charges brought forward carry significant penalties, with the individuals facing up to five years in prison for each count of conspiring to operate an unlicensed money-transmitting business and violating the Bank Secrecy Act. The entities collectively known as KuCoin face even sterner potential penalties across multiple charges.
U.S. Attorney Damian Williams had this to say:
“As today’s Indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform. Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume. But financial institutions like KuCoin that take advantage of the unique opportunities available in the United States must also comply with U.S. law to help identify and drive out crime and corrupt financing schemes.
“KuCoin allegedly deliberately chose not to do so. As alleged, in failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds. 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.”
Ki Young Ju, founder and CEO of South Korea-based crypto analytics startup CryptoQuant, says that “on-chain wise”, KuCoin is doing OK:
Featured Image via Pixabay
