The United States Department of Justice has revealed an indictment against cryptocurrency exchange KuCoin and two of its founders for engaging in the operation of an unlicensed money transmitting business and for violating the Bank Secrecy Act (BSA).
According to the announcement made on March 26, KuCoin founders Chun Gan and Ke Tang intentionally neglected to establish an Anti-Money Laundering program at the exchange, resulting in the platform being exploited for money laundering and terrorist financing activities. The company itself has been charged with operating an unlicensed money-transmitting business and violating the BSA.
The U.S. Attorney Damian Williams stated, “KuCoin and its founders deliberately concealed the fact that a significant number of U.S. users were trading on KuCoin’s platform. In fact, KuCoin allegedly took advantage of its substantial U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, facilitating billions of dollars of daily trades and trillions of dollars of annual trade volume.”
In addition to the criminal charges brought forward by the Department of Justice, the U.S. Commodity Futures Trading Commission (CFTC) also filed a civil enforcement case against KuCoin on March 26. The CFTC charged the exchange with multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations. According to the Justice Department, KuCoin received over $5 billion and sent over $4 billion of suspicious and criminal funds.
Chun Gan and Ke Tang played key roles in the establishment of KuCoin in 2017. As stated on the exchange’s website, KuCoin’s operational headquarters are located in Seychelles. At the time of publication, the two founders, both Chinese nationals, were still at large.
The U.S. government has been actively pursuing criminal charges against cryptocurrency exchanges and their executives operating within the country. Former FTX CEO Sam Bankman-Fried, who was convicted on seven felony charges, is set to be sentenced on March 28. Former Binance CEO Changpeng Zhao is also expected to be sentenced on April 30.
As crypto-related crime continues to be a concern, U.S. enforcement agencies are intensifying their efforts to combat illicit activities in the industry.