KUCOIN CHARGED FOR AML BREACHES: OUTFLOWS SOAR, KCS DIVES 13%

The founders of KuCoin are currently evading capture and could face up to five years in prison if convicted of the charges brought against them.

The cryptocurrency exchange KuCoin, together with its two founders, is charged with neglecting to establish necessary anti-money laundering (AML) and know-your-customer (KYC) protocols.

The lack of these procedures on KuCoin reportedly made it possible for the platform to facilitate the laundering of money derived from criminal activities.

Charges Filed Against KuCoin and Its Founders

On March 26, a statement from US prosecutors charged KuCoin and its founders, Chun Gan and Ke Tang, with operating without the proper licensing for a money transmission business and violating the Bank Secrecy Act.

The allegations detail that KuCoin and its co-founders catered to American customers without registering with the Financial Crimes Enforcement Network (FinCEN) or the Commodity Futures Trading Commission (CFTC) as required for operating within the US.

Furthermore, it’s charged that they deliberately neglected to follow AML guidelines or to set up a KYC procedure on their exchange. Instead, efforts were made to hide the presence of US users on their platform, even falsely declaring at one point that they had no American users.

US Attorney Damian Williams highlighted that KuCoin leveraged its significant US customer base to become one of the leading global cryptocurrency exchanges.

The press release mentioned that KuCoin’s lack of KYC policies made it appealing to those seeking anonymity, claiming this policy was “central to its expansion and prosperity.”

Darren McCormack, the HSI Acting Agent in Charge, described the actions of KuCoin, Gan, and Tang as part of an “alleged multi-billion dollar criminal conspiracy.”

He stated, “Due to KuCoin’s deliberate omission of AML and KYC protocols, the platform has been exploited to launder vast amounts of money tied to criminal activities, including darknet marketplace transactions, and malware, ransomware, and fraud operations. Since its inception in 2017, KuCoin has handled over $5 billion in suspicious and illicit funds.”

According to Nansen, within the first 12 hours following the announcement, KuCoin experienced nearly $800 million in net withdrawals. The exchange’s own cryptocurrency, KCS, saw its value drop approximately 13%.

Further Legal Actions Against Major Crypto Exchanges by US Authorities

Gan and Tang face up to five years in prison for each of the two charges against them. At the moment of the indictment, both KuCoin founders were still not apprehended.

As previously covered by CryptoPotato, KuCoin agreed to a $22 million fine in a settlement with the New York Attorney General (NYAG) and ceased its operations in New York.

In a related development, Binance, another leading crypto exchange, faced similar accusations in the US, leading to a guilty plea and a settlement of $4.3 billion with the Department of Justice.

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