KuCoin and its Founders Could Potentially Face Up to a Decade in Prison for Breaching U.S. Anti-Money Laundering Legislation
KuCoin, one of the world’s largest cryptocurrency trading platforms, and its founders, Chun Gan (aka “Michael”) and Ke Tang (aka “Eric”), are facing criminal charges from US regulators. The charges stem from allegations that they operated without the proper licenses and failed to comply with the Bank Secrecy Act, specifically regarding anti-money laundering measures. If convicted, they could potentially face 5-10 years in prison.
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KuCoin Accused of Deliberately Evading US Laws
Gan and Tang, who lead KuCoin, are accused of intentionally disregarding US laws aimed at combating money laundering and terrorist financing. Since its establishment in 2017, KuCoin has sought to attract US customers and become one of the leading global cryptocurrency exchanges, with daily trading volumes reaching billions and annual volumes reaching trillions. However, it is alleged that this impressive growth was achieved by disregarding important US regulations against money laundering.
US Attorney Damian Williams highlighted that KuCoin and its founders deliberately made it difficult to determine if US users were trading on their platform. This secrecy, coupled with their failure to adhere to basic anti-money laundering rules, allowed KuCoin to operate in a manner that was not fully legal and potentially facilitated the movement of illicit funds. It is claimed that the exchange handled over $9 billion in suspicious or criminally sourced funds.
The press release stated, “Today’s Indictment should send a clear message to other crypto exchanges: if you plan to serve US customers, you must comply with US law, plain and simple.”
Officials state that KuCoin was obligated to follow regulations designed to prevent money laundering, including registering with US financial authorities such as the Financial Crimes Enforcement Network (FinCEN) and the Commodity and Futures Trading Commission (CFTC). These regulations ensure that businesses like KuCoin verify the identities of their customers to prevent illegal activities like money laundering.
Despite these clear requirements, KuCoin’s founders, Chun Gan and Ke Tang, along with the company itself, are accused of evading these legal obligations. It was only in July 2023, when KuCoin became aware of a federal criminal investigation, that the company started requesting identification from new customers.
However, this action was too little, too late, as it failed to address the identification of millions of existing customers, including a significant number from the United States. The company also neglected to report suspicious activities, a crucial requirement under US law.
KuCoin Concealed US Customers
KuCoin also made efforts to conceal the fact that it served US customers. Despite collecting data that could reveal customer locations, KuCoin made it challenging for US customers to disclose their nationality during the registration process. Furthermore, the company falsely claimed to investors that it had no US customers, despite having a substantial user base in the country. KuCoin even promoted itself on social media as a platform where US users could trade anonymously, bypassing the need for identity verification.
Chun Gan and Ke Tang, both from China, face charges related to violating the Bank Secrecy Act and operating an unlicensed money transmitting business, with potential sentences of up to five years for each count. Similarly, KuCoin, which operates through entities registered in the Cayman Islands, Seychelles, and Singapore, is accused of violating the Bank Secrecy Act and other offenses, potentially leading to a maximum sentence of 10 years in prison for each charge.
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Crypto Regulations
Cryptocurrency