KuCoin’s native token 15% shortly after news of the lawsuit emerged.
The United States government, via the Attorney’s Office for the Southern District of New York, has sued KuCoin, one of the largest centralized cryptocurrency exchanges by trading volume, and its founders for operating an unlicensed money-transmitting business and willfully violating the Bank Secrecy Act.
According to a press release by the Attorney’s Office, KuCoin founders Chun Gan and Ke Tang violated US anti-money laundering laws to grow their platform into one of the world’s largest exchanges. The duo willfully failed to maintain an anti-money laundering (AML) and terrorist financing program to prevent the crypto exchange from being used for illegal activities.
News about the lawsuit swiftly dragged KuCoin’s native token, KCS, down to weekly lows. At the time of writing, the asset was trading at $12.60, down 15% in the past 24 hours.
US Charges KuCoin
KuCoin and its affiliates allegedly failed to maintain standard know-your-customer (KYC) procedures and refrained from filing any reports on suspicious activity from the time of its launch in 2017.
The government claims KuCoin serves millions of customers in the US despite claiming not to do so. The exchange allegedly failed to register with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Commodity and Futures Trading Commission (CFTC) until late 2023.
When the duo eventually implemented KYC procedures on KuCoin in July, the program was exclusive to only new customers, leaving millions of existing customers on the exchange, including those in the US, without necessary means of identification.
KuCoin Founders Face Five Years in Prison
Furthermore, the KuCoin founders attempted to hide the existence of US customers on the crypto exchange, making it appear the platform was exempt from the country’s AML and KYC laws. While KuCoin took steps to prevent American users from identifying themselves when opening accounts, the exchange advertised itself to the US market, touting the absence of KYC procedures on the platform.
Hence, since its inception, KuCoin has received and sent $5 billion and $4 billion in criminal proceeds.
Although Gan and Tang have not been apprehended, they face maximum sentences of five years in prison for their roles in the business.
Meanwhile, New York’s Attorney General Letitia James entered an agreement requiring KuCoin to cease its operations in the city in December 2023 and pay a $22 million fine to settle a lawsuit filed in March of the same year.
