Another crypto firm is facing criminal and civil charges as U.S. law enforcement officials continue their campaign to rein in the industry following the November 2022 collapse of FTX.
On Tuesday, the Department of Justice filed criminal charges against KuCoin, a Seychelles-based crypto firm that operates the seventh-largest exchange by spot trading volume, according to CoinMarketCap, along with its two founders. The Commodity Futures Trading Commission added its own civil complaint.
U.S. Attorney for the Southern District of New York Damien Williams is alleging KuCoin has concealed the rampant presence of U.S. users on its platform, taking advantage of the customer base to become one of the world’s largest crypto exchanges in violation of federal law.
“In 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,” Williams said in a statement, adding that the exchange has received over $5 billion in suspicious and criminal funds.
A checkered record
While KuCoin doesn’t have the market dominance or name recognition of Coinbase or Binance, it’s risen to prominence by offering an array of derivatives and spot trading products. The firm has also faced controversy, including for promoting high-yield investment tools even as competitors filed for bankruptcy after the failure of similar offerings. In December 2022, KuCoin CEO Johnny Lyu told Fortune that the platform laid out potential risks to users.
Despite attempts to distance itself from FTX, KuCoin still invited scrutiny from regulators and lawmakers, with Sen. Ron Wyden (D-Ore.) sending a letter to several exchanges, including KuCoin, requesting information for their bankruptcy protocols in the immediate aftermath of FTX’s collapse.
While KuCoin was not technically available to U.S. customers, some did so by using workarounds such as VPNs. In December 2023, New York Attorney General Letitia James settled with the exchange for $22 million after alleging that the firm failed to register as a securities and commodities broker-dealer. “Unregistered offshore crypto platforms pose a risk to investors, consumers, and the broader economy,” James said in a statement at the time.
Tuesday’s charges from the DOJ and CFTC are the latest in a string of enforcement actions against crypto firms. In November, both agencies—along with the Treasury Department—reached a historic settlement for $4.3 billion with top exchange Binance, which still faces a lawsuit from the Securities and Exchange Commission. The DOJ has also charged other crypto firms with violating banking and anti-money laundering laws, including the mixers Tornado Cash and Bitcoin Fog.
According to the indictment, KuCoin has solicited business from U.S. customers through both its spot trading and futures trading platforms since the platform’s 2017 founding, although it never registered as a money transmitting business or futures commission merchant in the U.S. The DOJ alleges KuCoin only instituted a “know-your-costumer” program in July 2023 after being notified of a federal criminal investigation.
The indictment, which includes charges against KuCoin’s two founders, Chun Gan and Ke Tang, who are both citizens of China, further alleges that criminal organizations used the platform to launder their proceeds, including from darknet markets and malware, ransomware, and fraud schemes.
“The regulatory matter related to KuCoin has come to my attention,” CEO Lyu posted on X after the announcement. “While we’re working on it, the platform is unaffected and operating normally as usual.”
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FAQs
The indictment, which includes charges against KuCoin's two founders, Chun Gan and Ke Tang, who are both citizens of China, further alleges that criminal organizations used the platform to launder their proceeds, including from darknet markets and malware, ransomware, and fraud schemes.
Is KuCoin charged with anti-money laundering violations? ›
March 26 (Reuters) - Federal prosecutors in Manhattan on Tuesday charged KuCoin, one of the world's largest cryptocurrency exchanges, with violating U.S. anti-money laundering laws by failing to vet customers, allowing billions of dollars in illicit funds to be transferred since its founding in 2017.
Why is KuCoin banned in the US? ›
The exchange was charged under the Bank Secrecy Act.
Crypto exchange KuCoin and two of its founders were charged with violating anti-money laundering laws by U.S. federal prosecutors.
Is KuCoin under investigation? ›
It was only in July 2023, after KuCoin was notified of a federal criminal investigation into its activities, that KuCoin belatedly adopted a KYC program for new customers.
Who is the owner of KuCoin? ›
Headquartered in Seychelles, KuCoin was founded by Chun Gan and Ke Tang in 2017.
Can I get my money back from KuCoin? ›
You can't withdraw assets directly from KuCoin to a bank account. KuCoin doesn't support fiat withdrawals. However, you can still get your money into your bank account. The key is to transfer your crypto from KuCoin to another crypto exchange that supports fiat withdrawals.
Is it safe to keep money on KuCoin? ›
In conclusion, Kucoin has established itself as a reputable and trustworthy cryptocurrency exchange, thanks to its robust security measures, positive user reviews, commitment to regulatory compliance, and dedication to customer support.
Are US citizens allowed to trade on KuCoin? ›
The good news is KuCoin is available to US citizens and residents, you just need to access it directly rather than through a VPN. To trade on KuCoin from the US, you'll need to provide personal details like your full name, address, Social Security number, and a government-issued photo ID.
Which country does KuCoin belong to? ›
While KuCoin's global headquarters is situated in Seychelles, the exchange's roots can be traced back to Singapore, where it was founded in 2017.
What legal action is being taken against KuCoin? ›
U.S. prosecutors have filed criminal charges against KuCoin and two of its founders, accusing the global cryptocurrency exchange of violating U.S. anti-money-laundering laws.
China-based cryptocurrency exchange platform KuCoin hits $10B valuation.
How to withdraw from KuCoin in the US? ›
How to Withdraw Crypto from KuCoin
- Log into your KuCoin account. ...
- From there, select the cryptocurrency you wish to withdraw from the dropdown (Example: USDT).
- Once done, add a Wallet Address, enter the Withdrawal Amount, and select the correct Network, with the remarks field being optional.
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Although you can't buy KuCoin Token on Kraken today, you can get started with 262 other cryptocurrencies with the Kraken app.
What are the charges against KuCoin? ›
U.S. prosecutors have filed criminal charges against KuCoin and two of its founders, accusing the global cryptocurrency exchange of violating U.S. anti-money-laundering laws.
What fees does KuCoin charge? ›
KuCoin offers a tiered maker/taker fee model, with trading fees ranging from -0.005%-0.1%, depending on your tier level. 6 Its fees are relatively low compared to competitors, which may charge up to 0.50% per trade. Users can also get trading fee discounts based on their KuCoin Token (KCS) balance.
Is KuCoin IRS compliant? ›
Yes, KuCoin transactions are considered taxabale events under capital gains tax or income tax in many countries. The tax rates differ from jurisdiction to jurisdiction and some may even offer tax exemptions based on profit thresholds or holding periods. Read our crypto tax guides for more information.
Can the government track KuCoin? ›
Yes, Bitcoin and other cryptocurrencies can be traced. Transactions are recorded on a public ledger, making them accessible to anyone, including government agencies. Centralized exchanges provide customer data, such as wallet addresses and personal information, to the IRS.
