The Bank Secrecy Act was the law that led to charges against the exchange.
U.S. federal prosecutors accused KuCoin, a cryptocurrency exchange, and two of its founders of breaking anti-money laundering laws. They claimed KuCoin operated within the U.S., misled at least one investor about operating in the U.S., and failed to register with U.S. government bodies or maintain an anti-money laundering program. According to the U.S. Department of Justice, KuCoin and its founders, Chun Gan and Ke Tang, ran KuCoin as a money-transmitting business with over 30 million customers but only implemented a know-your-customer (KYC) or anti-money laundering (AML) program in 2023, which didn’t cover existing customers. The indictment stated that KuCoin didn’t register with the U.S. Financial Crimes Enforcement Network as a money services business.
Because KuCoin lacked KYC or AML programs, it was susceptible to being used for laundering proceeds from suspicious and criminal activities, including sanctions violations, darknet markets, and various schemes involving malware, ransomware, and fraud. The indictment also highlighted allegations that KuCoin indirectly received over $3.2 million worth of cryptocurrency from Tornado Cash, a sanctioned crypto mixer. KuCoin was mentioned in criminal cases against two developers of Tornado Cash, Alexey Pertsev and Roman Storm.
The Commodity Futures Trading Commission (CFTC) also filed a lawsuit against KuCoin, alleging failure to register as a futures commission merchant, swap execution facility, or designated contract market, and failure to implement the CFTC’s equivalent of a KYC program.
Homeland Security Investigations Special Agent in Charge Darren McCormack described KuCoin as an “alleged multibillion-dollar criminal conspiracy,” emphasizing its status as one of the largest crypto exchanges. U.S. Attorney Damien Williams accused KuCoin of actively concealing the fact that a significant number of U.S. users were trading on its platform. Williams stated that KuCoin’s lack of anti-money laundering policies allowed it to facilitate illicit money laundering, with transactions totaling over $5 billion received and over $4 billion sent in suspicious and criminal funds.
Following the announcement, KuCoin’s native token (KCS) fell by 5%, while Bitcoin’s (BTC) price dropped by 1%, although Bitcoin’s price has been volatile throughout the day, currently trading around $70,000.
These actions occurred shortly after the DOJ, CFTC, and Treasury Department settled similar charges against Binance, the world’s largest cryptocurrency exchange by trading volume.
