The United States has charged cryptocurrency exchange KuCoin and two of its founders with flouting money laundering laws.
Federal prosecutors have charged KuCoin and founders Chnu Gan and Ke Tang with conspiring to operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act by willfully failing to maintain an adequate AML programme.
Founded in 2017, KuCoin is one of the world's biggest crypto exchanges, with more than 30 million customers and daily trading volumes in the billions of dollars.
Despite soliciting business from US customers and being aware of their AML obligations in the country, Gan, Tang and KuCoin "willfully chose to flout" its requirements, says a newly unsealed indictment.
The company did not require customers to provide any identifying information until July 2023 when it finally rolled out a KYC programme after being told about a federal criminal investigation into its activities, say authorities. Even then, the KYC programme only applied to new customers.
KuCoin also never filed any required suspicious activity reports, never registered with the CFTC as a futures commission merchant, and, through at least the end of 2023, never registered with FinCEN as a money transmitting business.
In fact, says the indictment, Gan, Tang and KuCoin "affirmatively attempted to conceal the existence of KuCoin’s US customers" in order to make it appear as if the exchange was exempt from US AML and KYC requirements.
"As a result of KuCoin’s willful failures to maintain the required AML and KYC programs, KuCoin has been used as a vehicle to launder large sums of criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes," say authorities.
US Attorney Damian Williams says: "As alleged, in failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds."
The CFTC has filed its own civil enforcement action, charging KuCoin with operating an illegal digital asset derivatives exchange.