KuCoin, a cryptocurrency exchange, has pleaded guilty to operating without a license in the United States. The settlement with the Department of Justice (DOJ) includes nearly $300 million in penalties and forfeitures.
Kucoin has reached a settlement with U.S authorities. Source: Kucoin on XDetails of the Settlement and Penalties
As part of the agreement, the exchange will pay $184.5 million in forfeitures and $112.9 million in fines, totaling $297.4 million. The exchange’s founders, Chun “Michael” Gan and Ke “Eric” Tang, will forfeit $2.7 million in funds derived from U.S. operations and step down from their roles.
The settlement also requires KuCoin to exit the U.S. market for two years, significantly impacting its user base, which included 1.5 million registered users in the U.S. The platform reportedly earned $184.5 million in fees from these users.
Accusations of AML and KYC Failures
The DOJ’s case against KuCoin centered on its failure to implement Anti-Money Laundering (AML) and Know Your Customer (KYC) programs. Until August 2023, KuCoin allowed users to trade without providing identification. Employees even publicly stated on social media that KYC was not mandatory.
These lapses allegedly enabled billions of dollars in suspicious transactions, including proceeds linked to darknet markets, ransomware attacks, and fraud schemes. U.S. Attorney Danielle R. Sassoon said, “KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions.”
KuCoin Founders Step Down and Agree to Deferred Prosecution
Under the settlement, founders Gan and Tang have entered deferred prosecution agreements with the DOJ. While they will avoid further legal action, they are permanently barred from involvement in KuCoin’s management.
Gan, in a public statement, described the settlement as “a favorable outcome” and emphasized that he had no intent to violate U.S. laws. BC Wong, KuCoin’s chief legal officer, will assume the role of CEO to lead the exchange’s future operations.
KuCoin’s Operations Outside the U.S. Remain Unaffected
Despite the settlement, KuCoin announced that its global operations remain unaffected. In a blog post on January 28, the company highlighted its recent efforts to strengthen compliance and platform security.
Earlier in 2023, KuCoin paid a $22 million in settlement with the state of New York to resolve allegations that it illegally operated without proper registration and misled investors.
U.S. regulators have reportedly collected over $19 billion in settlements from cryptocurrency companies, representing two-thirds of all crypto-related penalties to date.
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