U.S. Charges Major Crypto Exchange KuCoin and Founders for Breaking Financial Laws

The U.S. Southern District of New York's chief prosecutor, Damian Williams, along with HSI New York's interim chief, Darren McCormack, have unveiled indictments against the global digital currency platform KuCoin and its creators, Chun Gan ("Michael") and Ke Tang ("Eric").

These charges involve illegal money transmission and breaking the Bank Secrecy Act, including not having a proper program to prevent money laundering and terrorist financing, failing to check customer identities properly, and not reporting suspicious activities.

The indictment highlights KuCoin's strategy of growing its U.S. user base to become a top cryptocurrency exchange, boasting daily transactions worth billions and yearly volumes in the trillions.

However, this growth came with a disregard for U.S. laws meant to fight financial crime, leading to KuCoin's involvement in over $9 billion of dubious transactions.

Founded in September 2017 by Gan, Tang, and associates, KuCoin aggressively pursued American customers for its trading services, amassing over 30 million users worldwide.

Despite legal requirements to register with U.S. regulatory agencies like FinCEN and comply with AML and customer identification protocols, KuCoin opted to ignore these rules.

Notably, until a federal probe was announced in July 2023, KuCoin hadn't put in place any process for verifying the identity of its clients, with later efforts applying only to new sign-ups and not to the vast number of existing accounts, including those in the U.S.

KuCoin also made efforts to hide its U.S. clientele to seem as if it didn’t need to follow American regulatory standards, even misleading investors about where its users were located. It used social media to attract U.S. users seeking transaction anonymity.

Charges against Gan and Tang include violating the Bank Secrecy Act and running an unlicensed money-transmitting business, with possible five-year prison sentences per charge. KuCoin and its related corporations face similar accusations, with penalties ranging from five to ten years.

This case underscores the U.S. commitment to enforcing financial laws, especially in the evolving digital currency sector, serving as a warning to other platforms about the necessity of adhering to U.S. regulations.

The collaborative effort in this investigation and prosecution aims to protect the financial system from being exploited for illegal purposes.