U.S. Charges Crypto Exchange KuCoin for Violating Anti-Money Laundering Laws
The Commodity Futures Trading Commission (CFTC) filed a separate lawsuit against KuCoin, alleging failure to register as a futures commission merchant and implement required KYC protocols.
U.S. federal prosecutors have charged popular cryptocurrency exchange KuCoin and two of its founders with violating anti-money laundering (AML) laws. The charges, filed under the Bank Secrecy Act, allege that KuCoin operated as a money-transmitting business in the United States without proper registration and failed to implement adequate KYC (know-your-customer) and AML programs.
The indictment, revealed on Tuesday, accuses KuCoin and its founders Chun Gan and Ke Tang of running the exchange without a KYC or AML program until as late as 2023. This lapse in compliance, according to the U.S. Department of Justice (DOJ), allowed KuCoin to be used as a vehicle for laundering proceeds from suspicious and criminal activities, including those related to sanctions violations, darknet markets, and various cybercrime schemes.
Notably, KuCoin allegedly received over $3.2 million worth of cryptocurrency from Tornado Cash, a sanctioned crypto mixer, indirectly facilitating the laundering of illicit funds. Additionally, the Commodity Futures Trading Commission (CFTC) filed a separate lawsuit against KuCoin, alleging failure to register as a futures commission merchant and implement required KYC protocols.
The repercussions of the charges were immediately felt in the market, with KuCoin's native token (KCS) dropping by 5% following the announcement. Bitcoin (BTC) also experienced a 1% drop in price amid the news, of the potential impact of regulatory actions on the broader cryptocurrency market.
Tuesday's charges against KuCoin come in the wake of similar enforcement actions against other major crypto exchanges, including Binance, signaling heightened regulatory scrutiny within the industry. As authorities crack down on non-compliant exchanges, investors and stakeholders are increasingly attentive to regulatory compliance and AML standards in the crypto sector.
