The U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) filed lawsuits against KuCoin on the same day. The former seeks criminal penalties while the latter requests fines and a registration ban. Despite KuCoin having previously paid tens of millions of dollars in fines in the U.S., it is facing regulatory issues once again.
KuCoin to pay $22 million settlement and exit New York, U.S.
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According to the indictment from the US Department of Justice, federal prosecutors on the 26th filed charges against KuCoin and two founders, including failure to register as an entity in the US and implement anti-money laundering measures.
The indictment states:
KuCoin and founders Chun Gan and Ke Tang operated KuCoin as a money transfer business with over 30 million users, but did not implement a KYC or AML program until 2023. Failure to implement KYC and AML could allow KuCoin to be used in money laundering, sanctions violations, illegal software, and other criminal activities.
Federal prosecutor Damian Williams stated that even though KuCoin later implemented KYC, it did not apply to existing users, and KuCoin was not registered with the US Financial Crimes Enforcement Network as a money service business. The two founders were not arrested.
The indictment also mentioned that KuCoin was involved in the criminal case of Tornado Cash developers Alexey Pertsev and Roman Storm, where KuCoin indirectly received over $3.2 million worth of cryptocurrency from Tornado Cash.
Dutch authorities sue Tornado Cash developers for laundering over $1.2 billion: members profit from it
The US Commodity Futures Trading Commission (CFTC) has also filed a civil lawsuit against KuCoin, alleging multiple violations of the Commodity Exchange Act and CFTC regulations.
The CFTC pointed out that KuCoin engaged in margin trading, involving operations of futures and other leveraged trading.
The good news is that the CFTC once again stated that Bitcoin, Ethereum, and Litecoin are all commodities falling within its jurisdiction.
CFTC Chairman counters SEC's position, insists Ethereum and stablecoins are commodities
A tweet from the official KuCoin account stated that they are aware of the regulatory reports and emphasized that KuCoin complies with regulations in all countries and is operating normally.
Monitoring agency Spot On Chain noted that approximately $500 million has flowed out of KuCoin following the US accusations.
~$500M has been withdrawn from the Kucoin exchange on the Ethereum network in the past hours after the US Government indicted KuCoin on Criminal Charges.
The top withdrawing:
~274M $USDT
~15.5K $ETH (~$55M)
~50M $ONDO (~$46M)
~12M $FET (~$34M)
~95.38M $GHX (~$21.8M)More… pic.twitter.com/6gQW0ybnZB
— Spot On Chain (@spotonchain) March 27, 2024