US Authorities Accused KuCoin of Money Laundering
U.S. authorities have accused the largest exchange KuCoin, as well as its two founders, of criminal conspiracy, specifically laundering $9 billion, violating the Bank Secrecy Act and willful deception.
The charges state that KuCoin intentionally operated without licenses, failed to comply with the AML law, failed to conduct KYC and failed to prevent suspicious activity on the platform. In addition, due to the lack of necessary protocols, around $9 billion dollars was laundered through the exchange. Separately, it was highlighted that the exchange processed $3.2 million worth of transfers from crypto mixer Tornado Cash. Authorities claim that the management did this intentionally in order to strengthen its position in the U.S. market.
The charges also indicate that the exchange catered to a huge U.S. user base, although it claimed to have no U.S. customers. In addition, KuCoin was not registered with FinCEN as a financial services company.
Earlier, the New York regulator brought similar charges against KuCoin. Back then, the exchange agreed to pay $22 million to settle the case. If convicted, founders Chun Gan and Ke Tang could face jail time.
A separate lawsuit against KuCoin was filed by the CFTC. The U.S. Commodity Futures Trading Commission also accused the exchange of lack of KYC and failure to register as a broker for futures contracts. The regulator is demanding a fine and a trading ban. While the US DOJ is adding criminal penalties as well.
Interestingly, the US Commodity Futures Trading Commission has labeled Bitcoin, Ethereum, and Litecoin as commodities in the accompanying complaint against KuCoin. Ethereum's inclusion in the CFTC's complaint is significant given the recent rumors that the SEC is trying to recognize it as a security. Experts believe that the CFTC is directly challenging the SEC's approach to investigating Ethereum and other digital assets.
Hidden gem in the CFTC's KuCoin complaint 🍿
— Jake Chervinsky (@jchervinsky) March 26, 2024
Usually the SEC and CFTC pretend they aren't in a turf war over crypto. Today the CFTC is openly attacking the SEC's supposed investigation of ETH.
This may seem minor, but is actually pretty savage interagency drama by DC standards: pic.twitter.com/U8CJZMANUG
There was also news that the exchange was considering selling the business back in 2023. At that time, representatives of the platform sent their proposal to several executives of different exchanges, including Binance.
Exclusive: Three independent sources confirmed to WuBlockchan that KuCoin considered ceasing operations and selling the exchange in 2023. KuCoin was launched into criminal investigation by the U.S. in 2023, and has also been subject to multiple investigations in China. pic.twitter.com/7Fl4aLk6cW
— Wu Blockchain (@WuBlockchain) March 27, 2024
Market and KuCoin representatives' reaction
Amid the news, the exchange's native token, KCS, reacted with a sharp drop of 15%. According to different data, from 200 to 800 million dollars in assets were withdrawn from the platform over the day.
At the moment, more and more users are facing the problem of withdrawing funds from the exchange due to increased activity. Some operations are carried out for several hours. Users are divided into two camps: some call the exchange scam, and others on the contrary stood up in its defense, saying that the platform itself is working normally and there is no need to withdraw funds.
Representatives of the exchange also indicated in a separate message that all user assets are safe.
#KuCoin is operating well, and the assets of our users are absolutely safe. We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respect the laws and regulations of various countries and strictly adheres to compliance…
— KuCoin (@kucoincom) March 26, 2024
Despite the fact that KuCoin is the largest exchange, and its issues may negatively affect the entire market, many analysts say that nothing threatens the cryptocurrency market.
