KuCoin and its founders may be sentenced to a maximum of 10 years in prison for breaching U.S. Anti-Money Laundering regulations.
KuCoin, one of the largest cryptocurrency trading platforms in the world, and its founders, Chun Gan (known as “Michael”) and Ke Tang (known as “Eric”), have been indicted by US regulators on criminal charges. The allegations against them include operating without the proper licenses and failing to comply with the Bank Secrecy Act, specifically in relation to anti-money laundering measures. If convicted, they could face sentences of 5 to 10 years in prison.
According to the charges, KuCoin, under the leadership of Gan and Tang, intentionally disregarded US laws aimed at combating money laundering and terrorist financing. Since its establishment in 2017, KuCoin has sought to attract customers from the US and become one of the leading global cryptocurrency exchanges, with daily trading volumes reaching billions of dollars and annual volumes reaching trillions. However, it is alleged that this rapid growth was achieved by disregarding crucial US regulations concerning money laundering.
US Attorney Damian Williams stated that KuCoin and its founders deliberately made it difficult to determine whether US users were trading on their platform. This secrecy, combined with their failure to comply with basic anti-money laundering rules, allowed KuCoin to operate in a manner that was not fully compliant with the law, potentially facilitating the movement of illicit funds. It is estimated that the exchange processed over $9 billion in suspicious funds or funds derived from criminal activities.
The press release emphasized the significance of the indictment, stating, “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 was legally obligated to adhere to regulations aimed at preventing money laundering, including registering with 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 identities of their customers and 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 began requesting identification from new customers. However, this action came too late and failed to address the identification of millions of existing customers, including a significant number from the United States. Additionally, the company neglected to report suspicious activities, which is a key requirement under US law.
KuCoin also made efforts to conceal its provision of services to US customers. Despite collecting data that could reveal customer locations, KuCoin made it difficult for US customers to disclose their nationality during the sign-up 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, are facing charges related to violating the Bank Secrecy Act and operating an unlicensed money transmitting business. Each count carries a potential sentence of up to five years. KuCoin, which operates through entities registered in the Cayman Islands, Seychelles, and Singapore, is similarly accused and could face charges that carry sentences of up to 10 years for violating the Bank Secrecy Act and other offenses.