The famous cryptocurrency exchange KuCoin has pleaded guilty to one count of unauthorized money transmission business to the United States Department of Justice (DOJ). Following the plea, KuCoin’s parent company, Peken Global Limited, will pay a nearly $300 million fine, and the defaulting exchange will exit the U.S. financial market for at least two years.
KuCoin Flouts AML Laws
According to U.S. agencies, KuCoin has serviced about 30 million customers within about seven years, from September 2017 to March 2024. Approximately 1.5 million Americans have registered in the exchange within the timeframe, collectively paying about $184.5 million in transaction fees.
The renowned exchange did not abide by the U.S. anti-money laundering laws (AML) and know-your-customer (KYC) programs. It also failed to register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and report suspicious transactions. Thus, the exchange allowed users to transact cryptocurrencies without identity verification and became a haven for money laundering and other criminal acts.
Moreover, at the time, KuCoin employees constantly posted on social media platforms that KYC verification was not mandatory for customers intending to use their exchange.
Commenting on KuCoin’s errors, U.S. Attorney Danielle R. Sassoon said:
“For years, KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions. As a result, KuCoin was used to facilitate billions of dollars worth of suspicious transactions and to transmit potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes.”
$297.4 Million Loss
Following the guilty plea, Peken has agreed to forfeit $184.5 million and pay a criminal fine of $112.9 million for violating the U.S. AML laws while exiting the market.
Additionally, two of KuCoin’s founders, Chun Gan and Ke Tang, also known as Michael and Eric, will forfeit their positions in the company’s management alongside approximately $2.7 million in profits from the firm’s operations in the U.S.
Meanwhile, a few weeks ago, the crypto exchange BitMEX paid about $100 million in fines for defaulting on the American AML laws.
