Major crypto exchange KuCoin has agreed to pay $22 million in fines to the State of New York. In addition to the fine, KuCoin will prevent state residents from using its platform to perform cryptocurrency transactions. The KuCoin fine is one of several actions taken by the State of New York to crack down on the crypto sector, especially against illicit activities conducted by digital asset companies.
According to a court order filed on December 12, KuCoin has agreed to restrict New York residents from using its platform within 120 days. Thirty days from the date of the order, KuCoin will restrict all accounts to withdrawals only and then allow the remaining 90 days for users to withdraw all funds. At the end of the 120 days, KuCoin will close all New York residents’ accounts.
The crackdown highlights the state’s stance against cryptocurrency platforms, especially those it considers to be fully compliant with the law. While governments continuously crack down on seemingly shady crypto activities, several crypto firms still believe in promoting crypto privacy and anonymity. For instance, cryptocurrency mixers like Tornado Cash are designed to obscure crypto transactions so that their origins are difficult to trace. Many online gambling sites are dedicated to curating and reviewing online casinos where users can gamble with crypto anonymously (Source: https://insidebitcoins.com/bitcoin-casinos/best-anonymous-casinos). Despite governments’ best efforts, crypto firms continue to promote privacy and anonymity.
KuCoin was known for its privacy policy, which allowed users to create accounts and conduct transactions without complying with Anti-Money Laundering (AML) or Know Your Customer (KYC) regulations. KuCoin could do this because it did not require users to buy crypto using fiat and, therefore, had no need for traditional financial institutions to function as middlemen. Instead, the exchange accepted only crypto withdrawals and deposits. KuCoin did this until June, when it announced that KYC information would be compulsory, and later began to restrict non-verified users until they submitted the required documentation.
New York Attorney General (NYAG) Letitia James sued KuCoin in March for operating as a securities and commodities broker-dealer without registration. The lawsuit also accused KuCoin of wrongfully representing itself as an exchange while not registered. At the time, the Attorney General wrote that her office “is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk.”
The New York Attorney General’s Office has been on a somewhat prolonged crypto crackdown. Last October, the Attorney General sued Genesis Global, its parent company Digital Currency Group (DCG), and Gemini, the crypto company run by the Winklevoss Twins. The suit accused them of fraud worth more than $1 billion.
In February, the NYAG sued crypto exchange CoinEx for running a business in New York without registering. Papers filed in a Manhattan court stated that CoinEx repeatedly and persistently engaged in fraudulent practices. According to James, CoinEx violated the Martin Act, which prohibits misrepresentation or fraud regarding the purchase and sale of commodities and securities.
Earlier in the year, New York and 9 other states received up to $24 million in January, as fines from crypto firm Nexo Inc, also accused of similar infractions.
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FAQs
KuCoin is also banned from trading securities and commodities in New York and is prohibited from making its platform available to New Yorkers.
Are US residents allowed to trade on KuCoin? ›
Yes, you can use KuCoin from the US but only its limited version with low withdrawal amounts and other restrictions.
Why is KuCoin illegal in the US? ›
Crypto exchange KuCoin and two of its founders were charged with violating anti-money laundering laws by U.S. federal prosecutors. Homeland Security Investigations Special Agent Darren McCormack called KuCoin "an alleged multibillion-dollar criminal conspiracy."
Is KuCoin in trouble? ›
In a display of the United States' jurisdictional reach, the Justice Department has indicted KuCoin, a prominent global cryptocurrency exchange, along with founders Chun Gan and Ke Tang, for Bank Secrecy Act (BSA) and unlicensed money transmission offenses.
Why is KuCoin closing? ›
As alleged, 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, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds.
Why can't I withdraw 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.
Which country owns KuCoin? ›
Establishment: KuCoin was founded in 2017. Its headquarters reside in Seychelles. With the goal of “going glocal”, the platform established regional headquarters across many other countries in 2022. Leadership: KuCoin is led by two early blockchain adopters, Michael Gan (Chairman) and Eric Don (COO).
Is KuCoin no longer available in the USA? ›
KuCoin isn't licensed to operate in the US, so its verification process (KYC) isn't available. It only provides unlimited access to users who can be verified, which restricts US customers. For example, US users can't access deposit services and face withdrawal limits.
Is KuCoin Chinese? ›
Kucoin was initially based in China, then moved to Singapore following the Chinese government's restrictions on cryptocurrency companies, and subsequently to the Seychelles. Kucoin provides services related to blockchain and cryptocurrency, such as NFT trading.
Is KuCoin safe for US citizens? ›
Yes, KuCoin is available for use in the United States with limited restrictions. KuCoin is a global digital asset exchange, so US citizens are welcome to sign up, deposit funds, trade crypto, and withdraw assets.
Last December, KuCoin reached a $22 million settlement over charges of operating an unregistered exchange from New York Attorney General Letitia James. 2 Notably, that case referred to ether as a security, which has recently been disclosed as a new area of focus for the Securities and Exchange Commission (SEC).
Are my funds safe on KuCoin? ›
Verify Your Crypto Holdings on KuCoin
As of March 2024, all our user funds fully backed by real assets with a reserve ratio of 100% or over. All our users can verify that the assets in their KuCoin balances are fully backed by real assets in just a couple of minutes.
What are the allegations against KuCoin? ›
Prosecutors in the U.S. Attorney's Office for the Southern District of New York alleged KuCoin intentionally failed to have an adequate anti-money-laundering program to prevent the exchange from being used for terrorist financing and other illicit finance activities.
Has KuCoin crashed? ›
User reports indicate no current problems at Kucoin
Kucoin is a digital asset exchange for trading in cryptocurrencies like Bitcoin and Ethereum.
Is Binance safer than KuCoin? ›
The Binance vs Kucoin online crypto exchange comparison tool revealed that Binance has better features & higher in-depth evaluation scores than Kucoin.
What crypto exchange is legal in NY? ›
These exchanges, including top ones like Coinbase, Kraken, and Gemini, offer you a secure platform to buy and sell Bitcoin. They are regulated and licensed to operate, especially in New York, with strict crypto regulations.
Is crypto banned in New York? ›
The New York Senate passed Bill S6486D banning cryptocurrency mining in the state when relying on carbon-based energy sources to power their operation. 1 Here's a closer look at what's in the bill and what the cryptocurrency community needs to know.
Which countries can not use KuCoin? ›
The list of restricted locations includes the following regions:
- Singapore.
- The mainland of China and Hong Kong.
- Thailand.
- Malaysia.
- Uzbekistan.
- Ontario, Canada.
Last December, KuCoin reached a $22 million settlement over charges of operating an unregistered exchange from New York Attorney General Letitia James. 2 Notably, that case referred to ether as a security, which has recently been disclosed as a new area of focus for the Securities and Exchange Commission (SEC).
