US Charges KuCoin with Violating Bank Secrecy Act

By Mark Hunter

1 day agoWed Mar 27 2024 08:24:52

US-Charges-KuCoin-with-Violating-Bank-Secrecy-Act

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  • Federal prosecutors have charged KuCoin and two of its founders with operating an unlicensed money-transmitting business and violating the Bank Secrecy Act
  • Allegations include deliberate failure to maintain adequate anti-money laundering protocols and facilitating the laundering of $5 billion
  • Gan and Tang, both Chinese citizens, face charges carrying a maximum sentence of five years in prison, while associated entities may face up to 10 years

KuCoin and two of its founders have been charged by federal prosecutors with operating an unlicensed money-transmitting business and violation of the Bank Secrecy Act. The charges, filed against the company as well as Chun Gan and Ke Tang, stem from alleged deliberate failure to maintain adequate anti-money laundering (AML) protocols. The indictment further accuses Gan and Tang of actively concealing the presence of US customers to evade compliance with AML and Know Your Customer (KYC) regulations. 

KuCoin Failed to Implement KYC and AML

KuCoin, founded in 2017, has risen to prominence as one of the largest cryptocurrency exchange platforms worldwide, boasting over 30 million users and facilitating transactions worth billions of dollars daily. However, the indictment alleges that KuCoin, along with its Gan and Tang, served US residents, including those of the Southern District of New York, without adhering to essential regulatory requirements.

Key allegations include KuCoin’s failure to implement a robust KYC program, which would have enabled the verification of customer identities and prevented illicit use of its platform for money laundering and terrorist financing. Despite being aware of their obligations under US AML laws, KuCoin allegedly neglected to file mandatory suspicious activity reports and withheld crucial information from regulatory authorities.

The indictment further accuses the pair of actively concealing the presence of US customers to evade compliance with AML and KYC regulations. KuCoin’s no-KYC policy was purportedly instrumental in attracting customers seeking anonymity, facilitating the laundering of criminal proceeds totaling over $5 billion since its inception. The exchange finally implemented mandatory KYC last June.

Prison Time Awaits

Gan, aged 34, and Tang, aged 39, both citizens of China, face charges including conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money-transmitting business, each carrying a maximum sentence of five years in prison.

Additionally, entities associated with KuCoin, namely Flashdot Limited, Peken Global Limited, and Phoenixfin Private Limited, collectively known as “KuCoin,” are charged with multiple counts including conspiracy to violate the Bank Secrecy Act and operating an unlicensed money transmitting business, with potential sentences reaching up to 10 years in prison.

KuCoin posted a response of sorts on X, saying that its operations were unaffected:

#KuCoin is operating well, and the assets of our users are absolutely safe. We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respect the laws and regulations of various countries and strictly adheres to compliance…

— KuCoin (@kucoincom) March 26, 2024

The Department of Justice reported that Gan and Tang remain “at large,” suggesting that they remain in China.