The Department of Justice (DOJ) has indicted the cryptocurrency exchange KuCoin and its founders, Chun Gan and Ke Tang, for operating an unlicensed money-transmitting business and breaching the Bank Secrecy Act. According to the DOJ, KuCoin failed to establish an adequate anti-money laundering (AML) program and did not implement necessary procedures to verify the identities of its customers. Additionally, the exchange is accused of not filing suspicious activity reports as mandated by regulatory standards.
The indictment, on Tuesday, accuses KuCoin of deliberately avoiding compliance with U.S. AML and Know Your Customer (KYC) regulations by falsely claiming it did not serve U.S. customers despite having a significant user base in the country. The U.S. Attorney for the Southern District of New York, Damian Williams, stated that KuCoin’s actions allowed it to facilitate over $9 billion in money laundering activities, exploiting its considerable U.S. customer base to become one of the world’s largest platforms for cryptocurrency derivatives and spot exchanges.
Williams emphasized that financial institutions operating in the U.S. must adhere to laws designed to prevent crime and corruption financing.
Parallel to the DOJ’s criminal charges, the Commodity Futures Trading Commission (CFTC) filed a civil action against KuCoin, further intensifying the legal challenges facing the exchange. The combined legal actions highlight the U.S. government’s stringent stance on enforcing financial regulations within the cryptocurrency industry, particularly concerning anti-money laundering and customer identity verification processes.