KuCoin and its Founders Could Potentially Serve Up to a Decade in Jail for Breaching U.S. Anti-Money Laundering Regulations
KuCoin, one of the largest cryptocurrency trading platforms globally, and its founders, Chun Gan and Ke Tang, have been charged by US regulators. The charges stem from allegations of operating without the necessary licenses and failing to comply with the Bank Secrecy Act, specifically regarding anti-money laundering measures. They could potentially face 5-10 years in prison.
KuCoin Accused of Deliberately Evading US Laws
Gan and Tang, who lead KuCoin, are accused of intentionally disregarding US laws that combat money laundering and terrorist financing. Since its establishment in 2017, KuCoin aimed 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 neglecting important US regulations against money laundering.
US Attorney Damian Williams highlighted that KuCoin and its founders deliberately made it difficult to identify US users trading on their platform. This secrecy, along with their failure to adhere to basic anti-money laundering rules, allowed KuCoin to operate in a manner that was not fully legal, potentially enabling the movement of illicit funds. It is claimed that the exchange handled over $9 billion in suspicious funds or funds derived from criminal activities.
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.”
According to officials, KuCoin had an obligation to follow regulations that 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 are in place to ensure that businesses like KuCoin verify the identity of their customers to prevent illegal activities like money laundering.
Despite these clear requirements, KuCoin’s founders, Chun Gan and Ke Tang, as well as the company itself, are accused of evading these legal obligations. It was not until July 2023, when KuCoin became aware of a federal criminal investigation, that the company began requesting identification from new customers.
However, this action was too little, too late, as it did not address the identification of millions of existing customers, including a significant number in the United States. The company also failed to report suspicious activities, a crucial requirement under US law.
KuCoin Covertly Served US Customers
KuCoin also took measures 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. Additionally, 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. KuCoin, which is operated by entities registered in the Cayman Islands, Seychelles, and Singapore, is similarly accused and could face charges that carry a maximum sentence of 10 years in prison for violating the Bank Secrecy Act and other offenses, each with significant potential sentences.
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Crypto Regulations
Cryptocurrency