US authorities have charged crypto exchange KuCoin and two of its founders for allegedly operating as an illegal exchange in the USA and failing to implement anti-money laundering protocols. The Department of Justice (DoJ) has accused KuCoin and its founders, Chun Gan and Ke Tang, of violating the Bank Secrecy Act and operating as an unlicensed money transmitter business.
❖ PROMINENT GLOBAL CRYPTOCURRENCY EXCHANGE KUCOIN AND TWO OF ITS FOUNDERS CRIMINALLY CHARGED WITH BANK SECRECY ACT AND UNLICENSED MONEY TRANSMISSION OFFENSES: DOJ
— *Walter Bloomberg (@DeItaone) March 26, 2024
According to the Department of Justice (DoJ), KuCoin allegedly failed to implement any know-your-customer (KYC) or anti-money laundering controls until 2023. Moreover, when controls were finally implemented, they did not apply to existing customers.
Insufficient controls facilitated over $9 billion worth of suspicious transactions.
KuCoin and its founders, Chun Gan and Ke Tang, have been charged by the DOJ.
Why? For operating without a license and violating the Bank Secrecy Act.
So? $9 billion in suspicious transactions allegedly resulted from the lack of anti-money laundering (AML) measures.
— Ariel Givner, Esq. (@GivnerAriel) March 26, 2024
The Commodity Futures Trading Commission (CFTC) has also charged KuCoin with multiple violations of the Commodity Exchange Act. They are pursuing fines and trading bans. Additionally, the Department of Justice (DoJ) is seeking forfeiture and criminal penalties.
According to US Attorney Damien Williams, KuCoin attempted to conceal its use by a significant number of US users. He stated, “By failing to implement even the most basic anti-money laundering measures, the defendants allowed KuCoin to operate clandestinely within the financial markets, serving as a refuge for illicit money laundering. KuCoin received over $5 billion and transmitted over $4 billion in suspicious and criminal funds.”
The CFTC Responds to SEC’s Assertion Regarding Ether (ETH) Being a Commodity
The DoJ and CFTC’s joint action against KuCoin on Tuesday follows a pattern seen a few months ago when US regulators resolved comparable charges against Binance. Additionally, within its legal action against KuCoin, the CFTC is reaffirming its jurisdictional authority over Ether.
“During the Relevant Period, KuCoin solicited and accepted orders…involving digital assets that are commodities including bitcoin (BTC), ether (ETH), and litecoin (LTC)”, the CFTC said.
“During the Relevant Period, KuCoin solicited and accepted orders…involving digital assets that are commodities including bitcoin (BTC), ether (ETH), and litecoin (LTC).”@CFTC shots fired in wake of reports of @SECGov’s ETH-as-security investigation from last week pic.twitter.com/nYN0KWg1Iy
— Alexander Grieve (@AlexanderGrieve) March 26, 2024
The statement follows recent reports that the SEC is pushing to categorize ETH as a security, which momentarily affected Ether’s price. Last week, ETH briefly dropped to slightly above $3,000 but has since rebounded to over $3,500. This recovery has been supported not only by a general uptrend in the crypto market, with Bitcoin surpassing $70,000 again, but also by BlackRock’s entry into the asset tokenization sphere. The world’s largest asset manager introduced its inaugural tokenized money market fund, BUIDL, on the Ethereum platform.
