United States Justice Department officials have formally accused crypto exchange KuCoin and its two founders, Chun Gan and Ke Tang, of several legal breaches. The charges, unveiled on March 26, allege the duo operated an unlicensed money-transmitting business and violated the Bank Secrecy Act (BSA).
According to the Department, the founders deliberately neglected to uphold an Anti-Money Laundering (AML) program. This oversight purportedly allowed the platform to indulge in money laundering and terrorist financing activities.
U.S. Attorney Damian Williams criticized KuCoin and its founders, who “deliberately sought to conceal” the participation of U.S. users on their platform. Williams pointed out that this allowed KuCoin to emerge as a leading cryptocurrency exchange globally, boasting billions in daily trades and annual trading volumes reaching trillions of dollars.
He further thrashed the exchange for its lack of basic AML policies. According to Williams, this allowed the exchange to function “in the shadows of the financial markets” and serve as a “haven for illicit money laundering.”
Following the revelation of these charges, KuCoin experienced significant financial movements, with data from 0xscope reporting a net outflow of approximately $1.195 billion in the last 24 hours. More data from SpotOnChain showed that around $500 million was withdrawn from KuCoin’s Ethereum wallets, including substantial amounts of cryptocurrencies like USDT, ETH, ONDO, FET, and GHX.
Despite these withdrawals, over $3.6 billion worth of assets remain in KuCoin’s hot wallets on the Ethereum network at the time of writing.
To add to its woes, the U.S. Commodity Futures Trading Commission (CFTC) has also initiated a civil enforcement action against KuCoin on the same day. The regulator claims the exchange breached the Commodity Exchange Act (CEA) and CFTC regulations. The Justice Department has revealed that KuCoin handled over $5 billion in potentially suspicious and criminal funds, receiving and rerouting substantial amounts.
Interestingly, reports have also emerged suggesting KuCoin considered ceasing its operations and offering the exchange for sale in 2023. Cryptocurrency journalist Colin Wu, citing three reliable sources, indicated that the decision followed the commencement of a criminal investigation by the U.S. and scrutiny from Chinese authorities last year. The news of potential sale discussions came to light among specific individuals associated with various exchanges, including Binance.
