Breaking: US DOJ Charges Kucoin And 2 Co-Founders For Flouting AML Laws

The United States Department of Justice (DoJ) has charged Kucoin Exchange and two of its co-founders Chun Gan and Ke Tang for flouting multiple laws to grow their trading platform into one of the biggest in the nascent industry.

Kucoin Flouts Bank Secrecy Act

According to the charges brought on by Damian Williams the United States Attorney for the Southern District of New York and other top regulators, Kucoin, Gan, and Tang were hit with charges for conspiring to operate an unlicensed money-transmitting business and conspiring to violate the Bank Secrecy Act.

This makes the exchange the latest trading platform to be charged by the DoJ since the $4.3 billion Binance settlement that was reached in Q4 2023. Specifically, the trading platform is the first high profile outfit the DoJ will be charging this year. The DoJ noted that Kucoin facilitated billions of dollars in daily trade and trillions annually, the regulators noted that the exchange harbored illicit transactions that triggered money laundering activities.

Per the charges, Kucoin helped facilitate up to $4 billion in suspicious and criminal funds.

“Today, we exposed one of the largest global cryptocurrency exchanges for what our investigation has found it to truly be: an alleged multibillion-dollar criminal conspiracy.  KuCoin grew to service over 30 million customers, despite its alleged failure to follow laws necessary to ensuring the security and stability of our world’s digital banking infrastructure,” Darren McCormack, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations said in a statement.

Potential Sentences In View

In justifying the terms of the charges, the US regulators said Kucoin has served US customers as a spot trading outfit as well as a futures brokerage since at least 2019.

Despite their operations in the US and a clear understanding of the obligation to follow extant laws, the filing noted that neither Gan nor Tang made a move to register with the relevant authorities. They did not also implement proper Know-Your Customer (KYC) programs until at least July 2023.

Besides helping to facilitate about $4 billion in illicit transactions, the exchange also reportedly operated as a Money Transmitter Business without proper registration as one. For these offences, Gan and Tang are charged with one count of conspiring to violate the Bank Secrecy Act and another count of conspiring to operate an unlicensed money transmitting business. These offenses each carries a maximum sentence of five years in prison.

The exchange violations also carries multiple sentences which according to the filing will be determined by a Judge. Recall that BitMEX co-founder Arthur Hayes and Samuel Reed also faced related anti-money laundering violations in the United States.