The U.S. Department of Justice accused crypto exchange KuCoin and its two founders of violating the Bank Secrecy Act (BSA) and failing to comply with anti-money laundering (AML) regulations. The U.S. Commodity Futures Trading Commission (CFTC) charged the exchange with conducting an unlicensed business.

U.S. DOJ and CFTC File Charges Against KuCoin

The U.S. Attorney’s Office for the Southern District of New York (SDNY) filed criminal charges against crypto exchange KuCoin and its founders, Chun Gan and Ke Tang, on several counts of violating local laws.

Specifically, the DOJ charged KuCoin and its founders with:

  • conspiracy to conduct illegal funds transfer operations;
  • conspiracy to violate the Bank Secrecy Act (BSA);
  • failure to comply with anti-money laundering regulations;
  • conspiracy to operate an unlicensed money transmitting business.

According to U.S. Attorney Damian Williams, KuCoin’s founders deliberately sought to conceal the fact that many local users were trading on the platform. He also stated that the cryptocurrency exchange made no effort to identify and stop crime and corrupt financing schemes on the platform, thus violating even the most basic AML rules. Prosecutors identified more than $5 billion in funds received and about $4 billion sent through the crypto exchange as suspicious and involved in illegal activities.

In addition to the charges from the U.S. DOJ, KuCoin was the subject of a separate legal proceeding brought by the U.S. Commodity Futures Trading Commission (CFTC), which accused a group of companies affiliated with KuCoin of multiple violations of the Commodity Exchange Act (CEA). The CFTC charged the cryptocurrency exchange with:

  • unlawfully conducting off-exchange commodity futures transactions; 
  • conducting retail commodity transactions without registering with the CFTC as a futures commission merchant (FCM); 
  • lack of diligent oversight of transactions on the platform; 
  • failure to register with the CFTC as a swap execution facility (SEF) or designated contract market (DCM) operator; 
  • failure to implement an effective customer identification program (CIP). 

Representatives of the crypto exchange ensure that all user funds remain entirely safe, and the company’s lawyers are working to settle the cases. Quotations of KuCoin’s native token began to actively decline after disclosing the charges. According to CoinGecko data, KCS has lost more than 14% of its value in the last 24 hours.

The crypto community is divided on the charges against KuCoin. Some users started to doubt the legality of operations on the crypto exchange, expecting a massive withdrawal of funds from KuCoin’s accounts soon. Other crypto community members were quite skeptical about the accusations from the U.S. regulators, arguing that the U.S. authorities are repeating their gimmicks, which isn’t worth paying attention to. 

Criminal cases against crypto exchanges and their founders aren’t uncommon in the United States. Kraken, Coinbase, and Binance are among the accused.

Author: Nataly Antonenko
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