KuCoin entered a plea of guilty on Jan. 27 to operating an illegal money-transmitting company in a settlement reached with the U.S. Department of Justice. In the agreement, KuCoin agreed to withdraw from the U.S. Market for two year and to pay penalties of approximately $300 million. The plea addresses allegations the exchange failed to register with the Financial Crimes Enforcement Network, maintain anti-money-laundering safeguards, and report suspicious activities, per the U.S. Attorney’s Office for the Southern District of New York.
Documents from the court show that KuCoin was founded in 2017, and is operated by Seychelles based Peken Global Limited. It served about 1.5 million U.S. customers and generated fees of approximately $184.5 millions. According to prosecutors, the platform enabled billions in suspicious transactions. These included potential proceeds from fraud schemes and darknet markets. Chun Gan, Michael and Ke Tang are the founders of the exchange. They were indicted on March 20, 2024.
According to the Department of Justice, KuCoin users would not be required to submit identifying data until August 2023. Even for users based in the United States, employees had described Know-Your-Customer (KYC) checks as an optional measure. KuCoin introduced KYC for new registrants later, but customers who already had positions could withdraw them or close their accounts without having to meet these standards. KuCoin, according to the prosecutors, never submitted mandatory suspicious activity reporting.
KuCoin’s leadership responded to the settlement with optimism about future compliance. Newly appointed Chief Executive Officer BC Wong, referencing the resolution on social media, credited users’ support and highlighted KuCoin’s plans to innovate while ensuring regulatory adherence.
Per the exchange’s blog, KuCoin’s KCS token rose 13.7% following news of the plea agreement, suggesting investor relief and renewed confidence. Bitcoin has risen 5% since its low, and is now trading near $102,700. Ethereum, on the other hand, hovers at $3,203.62.
KuCoin must forfeit 184.5 millions dollars and pay a criminal fine in the amount of approximately $112,9 million. Each of the founders agreed to return $2.7 millions in proceeds. Prosecutors underlined that KuCoin’s failures in compliance facilitated large-scale laundering of potentially criminal funds, describing the resolution as a warning for businesses that disregard U.S. financial rules. KuCoin’s services will be unavailable to U.S.-based customers for a minimum of two years. During that time, the founders won’t participate in any operations.
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