Justice Department charges KuCoin and two founders with violating AML laws

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KuCoin founders Chun Gan and Ke Tang remained at large according to DOJ officials, who unsealed an indictment against the exchange on March 26.

Justice Department charges KuCoin and two founders with violating AML laws

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United States Justice Department officials unsealed an indictment against cryptocurrency exchange KuCoin and two of its founders for “conspiring to operate an unlicensed money transmitting business” and violations of the Bank Secrecy Act, or BSA.

In a March 26 announcement, the U.S. Department of Justice said KuCoin founders Chun Gan and Ke Tang had willfully failed to maintain an Anti-Money Laundering program at the exchange, leading to the platform being used for “money laundering and terrorist financing.” The company itself was charged with operating an unlicensed money-transmitting business and violating the BSA.

“KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform,” said U.S. Attorney Damian Williams. “Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.”

Williams added:

“[I]n failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering.”

The DOJ criminal charges were announced in parallel to a civil enforcement case from the U.S. Commodity Futures Trading Commission (CFTC), which charged KuCoin “with multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations” on March 26. According to the Justice Department, KuCoin received more than $5 billion and send more than $4 billion of “suspicious and criminal funds.” 

Related: KuCoin responds to claims of user funds being locked

Gan and Tang helped launch KuCoin in 2017. According to its website, KuCoin’s operational headquarters was in Seychelles. The two founders, Chinese nationals, remained at large at the time of publication.

U.S. officials have pursued similar criminal charges against crypto exchanges and their executives doing business in the country. On March 28, former FTX CEO Sam Bankman-Fried will be sentenced following his conviction on seven felony charges. Former Binance CEO Changpeng Zhao is expected to be sentenced on April 30.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

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