George Miller
On January 27, 2025, cryptocurrency exchange KuCoin accepted responsibility for operating without a proper license as a money-transmitting service. Two of its co-founders, Chun Gan and Ke Tang, entered into deferred prosecution agreements with the U.S. Department of Justice (DOJ).
KuCoin Acknowledges Guilt in DOJ Charges
The case originated in March 2024, when the U.S. Attorney’s Office for the Southern District of New York announced an indictment against KuCoin and its founders. The charges included conspiracy to run an unregistered money-transmitting business and failing to adhere to the Bank Secrecy Act (BSA) due to inadequate anti-money laundering (AML) measures. KuCoin also faced allegations for direct violations of the BSA.
The DOJ reported that KuCoin’s operations were insufficient in preventing illegal activities like money laundering and financing for terrorism. The indictment pointed out that the exchange lacked proper identity verification for customers and failed to file Suspicious Activity Reports. Investigations revealed that KuCoin did not have a robust compliance framework under the BSA and had deliberately ignored the presence of U.S. customers.
INTEL: KuCoin pleads guilty to U.S. charges of unlicensed money transmitting business
Two of its co-founders signed deferred prosecution agreements with the DOJ
— Solid Intel (@solidintel_x) January 27, 2025
On the same day, the Commodity Futures Trading Commission (CFTC) also initiated a legal case against KuCoin in federal court, alleging violations of the Commodity Exchange Act and pertinent regulations.
Implications for the Industry
The accusations against KuCoin resemble issues seen in other enforcement actions against notable crypto exchanges, such as Binance. The alleged absence of a solid compliance structure raised concerns, especially given KuCoin’s assertions regarding U.S. users.
This legal situation underscores the ongoing regulatory hurdles that cryptocurrency exchanges encounter in the United States. Agencies are increasingly vigilant about enforcing compliance with anti-money laundering regulations and customer verification processes to mitigate the risk of misuse in digital platforms.