KuCoin Executives Hit with US Criminal Charges in Billion-Dollar Conspiracy Case

By Jody McDonald March 27, 2024 In Crypto Exchange, Cryptocurrency, KuCoin

US Federal prosecutors allege KuCoin and its founders have breached US law by failing to implement even basic anti-money laundering measures and by failing to register to operate within the US.
Authorities say they will pursue criminal charges against the exchange and its founders in addition to monetary fines and trading bans.
Charges come after a similar case against Binance was settled last year resulting in a criminal charge against the CEO and approximately US$4 billion in penalties.

Another major cryptocurrency exchange has been slapped with charges by US Federal prosecutors—this time it’s KuCoin.

Prosecutors with the US Department of Justice (DOJ) say KuCoin and its founders, Chun Gan and Te Kang, broke US laws by failing to implement an effective anti-money laundering program, operating in the US without the requisite licences and registrations, and lying to at least one investor about operating in the US.

The charges against KuCoin come after the world’s largest crypto exchange, Binance, settled a similar case with US authorities last year, which saw the exchange ordered to pay approximately US$4 billion in fines and its CEO plead guilty to a single criminal charge.

Details Of The Indictment Against KuCoin

The charges against KuCoin were filed in the Southern District of New York on Tuesday by US Attorney Damian Williams.

Source: U.S. Department of Justice Southern District of New York

In the indictment, prosecutors allege Gan and Kang operated KuCoin as a money transmitting business with over 30 million customers for several years without implementing an effective anti-money laundering (AML) or know your customer (KYC) program. Prosecutors say even when the exchange did implement AML measures in 2023 they didn’t apply to existing customers, rendering them ineffective.

The indictment also alleges KuCoin failed to register with the U.S. Financial Crimes Enforcement Network as a money services business.

Prosecutors claimed that failing to implement an effective AML program made KuCoin an attractive option for people and organisations looking to launder ill gotten gains, saying the exchange:

…made itself available to be used, and in fact was used, as a vehicle for laundering the proceeds of suspicious and criminal activities, including proceeds from sanctions violations, darknet markets, and malware, ransomware, and fraud schemes

U.S. Attorney’s Office for the Southern District of New York

In addition to the charges filed by the DOJ, the US Commodity Futures Trading Commission (CFTC) also filed charges against KuCoin, saying the exchange—which offers both spot and futures trading—failed to register as a futures commission merchant, swap execution facility or designated contract market.

Investigator: KuCoin Was A “Multi-Billion Dollar Criminal Conspiracy”

Commenting on KuCoin’s conduct, the lead investigator, Homeland Security Investigations Special Agent in Charge Darren McCormack, described it as “an alleged multibillion-dollar criminal conspiracy”.

US Attorney Williams was similarly damning of KuCoin, saying:

In failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds.

Andre Damian Williams Jr.

The DOJ says it will pursue criminal penalties against KuCoin and its founders, while the CFTC says it is seeking to levy fines and impose registration and trading bans.