The United States Department of Justice (DOJ) has unveiled charges against cryptocurrency exchange KuCoin and its founders, Chun Gan and Ke Tang, for operating without a license and breaching Anti-Money Laundering (AML) regulations. The indictment, revealed on March 26, accuses the founders of deliberately failing to implement an AML program, leading to KuCoin’s utilization for money laundering and terrorist financing activities.
Charges Against KuCoin and Founders
According to the DOJ, KuCoin and its founders engaged in a conspiracy to run an unlicensed money-transmitting business and violated the Bank Secrecy Act (BSA). U.S. Attorney Damian Williams highlighted that KuCoin intentionally obscured the involvement of a substantial U.S. user base, leveraging it to become one of the largest cryptocurrency exchanges globally, with daily trades worth billions and annual trade volumes reaching trillions of dollars.
Williams criticized the exchange for its lack of basic AML policies, which allowed it to function outside the regulatory framework and become a refuge for laundering illicit funds. The DOJ’s announcement aligns with a civil enforcement action by the U.S. Commodity Futures Trading Commission (CFTC), which also charged KuCoin with several violations of the Commodity Exchange Act (CEA) and CFTC regulations on the same day.
Financial Transactions Scrutinized
The Justice Department’s investigation into KuCoin’s operations uncovered that the exchange had processed over $5 billion in suspicious and criminal funds, emphasizing the scale of alleged regulatory violations. This scrutiny comes as part of broader efforts by U.S. officials to regulate crypto exchanges and their executives, ensuring compliance with the country’s financial laws.
Founders’ Status and Global Operations
Chun Gan and Ke Tang, who initiated KuCoin in 2017 and are Chinese nationals, currently remain at large. The exchange, which lists Seychelles as its operational headquarters, finds itself at the center of a significant legal challenge as U.S. authorities continue to tighten oversight on cryptocurrency exchanges operating within its borders.
This indictment follows a pattern of legal actions against other crypto exchange leaders, with the sentencing of former FTX CEO Sam Bankman-Fried on seven felony charges upcoming, and former Binance CEO Changpeng Zhao also expected to face sentencing soon. These developments mark a pivotal moment in the ongoing dialogue between cryptocurrency entities and regulatory bodies in the United States.
