The DOJ Accuses KuCoin Founder of Violating Anti-Money Laundering Laws, Alleging it to be a 'Money Laundering Center

In a significant legal development, the United States Department of Justice (DOJ) has filed charges against cryptocurrency exchange KuCoin and its two founders, Chun Gan ("Michael") and Ke Tang ("Eric"), accusing them of violating anti-money laundering (AML) laws.

DOJ Unveils Indictment Against KuCoin and Founders for Unlicensed Money Transmission and AML Violations

The indictment, unsealed by the DOJ, alleges that KuCoin and its founders conspired to operate an unlicensed money transmitting business and violated the Bank Secrecy Act. Specifically, they are accused of willfully neglecting to maintain an effective AML program aimed at preventing money laundering and terrorist financing.

KuCoin Accused of Concealing US Customer Trading, Alleged AML Policy Violations

According to Damian Williams, the US Attorney for the Southern District of New York, KuCoin purportedly concealed the fact that a substantial number of its users engaged in trading on its platform, potentially exploiting its US customer base to become one of the world's largest cryptocurrency exchanges. Despite its immense growth, KuCoin allegedly failed to adhere to US laws, including basic AML policies, consequently operating as a hub for illicit money laundering.

KuCoin Founders Charged with Soliciting US Customers Without AML Compliance

The indictment contends that KuCoin, founded by Chun Gan and Ke Tang in September 2017, actively solicited business from US customers without fulfilling necessary AML obligations. Moreover, it is alleged that until July 2023, KuCoin lacked proper customer identification requirements and only implemented a KYC program after being alerted to the federal investigation. However, this program allegedly excluded existing customers, including a substantial number from the US, thus evading regulatory scrutiny.

Charges Against KuCoin Founders Send KCS Token Plummeting

In the event of conviction, Gan and Tang, both Chinese citizens, could face a maximum prison sentence of five years for each count of conspiring to violate the Bank Secrecy Act and operating an unlicensed money transmitting business. The news of the charges has significantly affected KuCoin's native token, KCS, which has experienced a sharp decline to $12.76, representing a 10% decrease within a one-hour timeframe.

In summary, the indictment against KuCoin and its founders underscores the US government's crackdown on cryptocurrency exchanges allegedly involved in money laundering activities, signaling potential legal repercussions and market ramifications for the exchange and its stakeholders.