Prominent Global Cryptocurrency Exchange KuCoin and Its Founders Criminally Charged

In a groundbreaking development announced today, Tuesday, March 26, by the United States Attorney’s Office for the Southern District of New York, Damian Williams, in collaboration with Darren McCormack, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (HSI), released an Indictment against KuCoin, a leading global cryptocurrency exchange, and two of its founders, Chun Gan and Ke Tang. 

The charges include conspiring to operate an unlicensed money-transmitting business and violating the Bank Secrecy Act by failing to maintain an adequate anti-money laundering (AML) program.

KuCoin, founded by Chun Gan and Ke Tang in September 2017, has burgeoned into one of the premier cryptocurrency exchange platforms globally. It has amassed over 30 million customers and oversees billions of dollars in daily trading volume. 

However, the indictment paints a troubling picture, alleging that KuCoin and its founders systematically evaded U.S. anti-money laundering laws to sustain their operations.

U.S. Attorney Damian Williams said, showing the gravity of the situation:

“KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges.” 

Despite its significant presence, KuCoin purportedly failed to abide by U.S. law, enabling illicit activities and money laundering on its platform.

KuCoin Deliberately Ignored Abiding By The US Law With No KYC

According to the indictment, KuCoin deliberately neglected implementing rudimentary anti-money laundering policies, such as customer identity verification (KYC), until July 2023. 

Furthermore, KuCoin actively concealed the existence of its U.S. customers to circumvent regulatory obligations, deceiving investors about its customer base and positioning itself as an exchange where users could trade without undergoing KYC procedures.

The indictment further alleges that KuCoin received over $5 billion and sent over $4 billion of suspicious and criminal funds since its inception in 2017. Many customers were attracted to KuCoin due to its no-KYC policy, making it a preferred platform for anonymous trading.

Chun Gan and Ke Tang, both citizens of China, now face charges of conspiring to violate the Bank Secrecy Act and operating an unlicensed money-transmitting business. 

The entities associated with KuCoin, including Flashdot Limited, Peken Global Limited, and Phoenixfin Private Limited, collectively face various charges and could potentially face substantial prison sentences if found guilty.

Mr. Williams commended HSI New York’s El Dorado Task Force for its tireless efforts in the investigation and acknowledged the Commodity Futures Trading Commission’s parallel civil action against KuCoin.

Related: UK’s FCA Adds 143 Crypto Exchanges, Including Huobi-owned HTX and KuCoin, to Warning List

A Severe Allegation

The press release emphasizes the severity of the allegations, stating:

“KuCoin allegedly 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.” 

This highlights the significant role KuCoin allegedly played in facilitating illicit financial activities, posing serious concerns for law enforcement agencies and regulators.

Moreover, the indictment accuses KuCoin’s founders of knowingly flouting U.S. laws. Williams states, 

“KuCoin, GAN, and TANG sought to serve, and have in fact served, numerous customers located in the United States and in the Southern District of New York.” 

This suggests a deliberate effort by the accused to bypass regulatory oversight and profit from their operations, showing the need for robust enforcement measures to address such violations.

The charges against KuCoin and its founders signal a significant escalation in regulatory scrutiny of cryptocurrency exchanges. Authorities are intensifying efforts to combat illicit financial activities in the crypto space, and exchanges and individuals operating within it must prioritize compliance with anti-money laundering laws and regulatory requirements to maintain trust and integrity in the industry.

In response to the charges, KuCoin and its founders have yet to issue a formal statement. The crypto communities are expecting a response soon.

Read Also: Hong Kong Securities Regulator Warns Investors of Criminal Activity by Unlicensed Exchanges