US Accuses KuCoin of Laundering $9 Billion

The US federal prosecutor charged cryptocurrency exchange KuCoin and its two founders with laundering $9 billion.

Authorities allege that platform founders Chun (Michael) Gan and Ke (Eric) Tang failed to implement KYC/AML procedures from 2017 to 2023, despite serving over 30 million clients. Subsequently, identification and verification did not apply to existing users.

Thus, the exchange was effectively “used for laundering proceeds from suspicious and criminal activities, including sanctions violations, darknet markets, and ransomware schemes.”

According to the indictment, from August 2022 to November 2023, 197 deposit addresses at KuCoin directly or indirectly received cryptocurrencies worth over $3.2 million from the sanctioned mixer Tornado Cash.

Moreover, the exchange was not registered with the FinCEN as a financial services company. At least one investor was misled about the absence of US clients at the exchange.

The extensive client base in the US, according to the prosecutor, allowed KuCoin to become one of the world’s largest cryptocurrency exchanges “with billions of dollars in daily trading volume.”

In addition to violating banking secrecy laws and anti-money laundering rules, the platform failed to file suspicious activity reports.

A separate lawsuit against KuCoin was filed by the CFTC. It also accused the platform of non-compliance with KYC and lack of registration as a futures commission merchant, swap execution facility, or designated contract market.

The CFTC seeks monetary penalties, trading bans, registration prohibitions, and an injunction, while the Department of Justice demands asset forfeiture alongside criminal penalties.

In total, KuCoin and its founders are accused of receiving over $5 billion and sending more than $4 billion in suspicious and criminal funds.

As of now, Gan and Tang have not been arrested.

Following the news, KuCoin’s native token fell by 15%, according to CoinGecko.

In March 2023, the New York State Attorney General’s Office accused KuCoin of violating securities laws by offering digital assets without a license and providing brokerage services without registration.

In December, as part of a pre-trial settlement, the platform agreed to pay over $22 million.