The US Department of Justice (DOJ) has made serious allegations against cryptocurrency exchange KuCoin and its founders, Chun Gan and Ke Tang, accusing them of violating anti-money laundering (AML) laws.

The charges include conspiracy to violate the US Bank Secrecy Act and operating an unlicensed money-transmitting business.

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Allegations Against KuCoin and Founders At a Glance

Gan and Tang, the founders of KuCoin, face charges related to their alleged role in concealing the substantial presence of US users on the platform, thus evading AML policies. 

According to the DOJ, KuCoin deliberately hid the fact that a significant number of US users were trading on its platform, allowing the exchange to process over $4 billion in suspicious and criminal funds while receiving $5 billion from operating "in the shadows of the financial markets."

Despite being a significant global player, KuCoin allegedly chose not to comply with US laws. The exchange did not require customers to provide identifying information until July 2023, even as it accounted for 17% of its total customer base and nearly a fifth of its website traffic.

“Indeed, until at least July 2023, KuCoin did not require customers to provide any identifying information. It was only in July 2023, after KuCoin was notified of a federal criminal investigation into its activities, that KuCoin belatedly adopted a KYC program for new customers,” the DOJ said.

The DOJ's indictment further accuses KuCoin and its founders of operating an unlicensed money-transmitting business and violating the Bank Secrecy Act. 

Further complicating its legal troubles, KuCoin is not registered as a Futures Commission Merchant (FCM) by the Commodity Futures Trading Commission (CFTC) or with the Financial Crimes Enforcement Network (FinCEN). Gan and Tang, both Chinese citizens, face charges that could result in a maximum prison sentence of five years.

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Previous Legal Issues

This is not the first time KuCoin has faced legal action. In December, the exchange settled with the New York Attorney General for $22 million over allegations of improper registration. KuCoin agreed to cease operations in New York and allocated $16.7 million for customer refunds.