Crypto exchange Kucoin charged for violating anti-money laundering laws

  • The US DoJ claimed that Kucoin saw a significant business growth by violating US laws
  • The founders of the exchange currently “remain at large”

The United States Department of Justice has announced charges against one of the biggest cryptocurrency exchanges – Kucoin. The charges also extend to two founders of the exchange – Chun Gan (alias Michael) and Ke Tang (alias Eric).

Notably, the US authority stated that the two identified executives “remain at large”. Additionally, the DoJ has charged them with “one count of conspiring to violate the Bank Secrecy Act and one count of conspiring to operate an unlicensed money transmitting business.” This would mean that they would be facing 5 years of maximum sentencing for each violation.

The official press release stated that the exchange and the founders conspired to “operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act by willfully failing to maintain an adequate anti-money laundering (“AML”) program.”

In addition to this, the DoJ also stated that the exchange did not take appropriate measures required to verify the identity of customers and report suspicious activity taking place on the platform. The DoJ also alleged that the exchange was in fact operating without acquiring the necessary money transmitting license, thereby violating the Bank Secrecy Act.

at all relevant times, KuCoin has been a money transmitting business required to register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and, since July 2019, has been a futures commission merchant required to register with the U.S. Commodity and Futures Trading Commission (“CFTC”).”

The press release claims that the named executives were aware of the company’s violations and chose to continue operations without abiding by the local laws. Moreover, the DoJ stated that the exchange did not implement a KYC system till July 2023. Post that, the KYC rules applied only to new customers and not existing ones. Interesting, the DoJclaims that this lackluster policy has resulted in a significant financial gain for the firm, stating,

“Since its founding in 2017, KuCoin has received over $5 billion, and sent over $4 billion, of suspicious and criminal proceeds.  Many KuCoin customers used its trading platform specifically because of the anonymity of the services it provided.  In other words, KuCoin’s no-KYC policy was integral to its growth and success.”

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