Suspected of violating anti-money laundering regulations! The founder of the exchange KuCoin is sued

The founder of the exchange KuCoin was prosecuted for violating anti-money laundering regulations!

On the evening of March 26, the U.S. Department of Justice disclosed on its official website that the cryptocurrency exchange KuCoin and its two founders were charged with violating the Bank Secrecy Act and unauthorized fund transmission. The U.S. Commodity Futures Trading Commission filed the lawsuit. (CFTC).

According to disclosed information, Damian Williams, U.S. Attorney for the Southern District of New York, and Darren McCormack, Acting Special Agent in Charge of the New York Office of Homeland Security Investigations (HSI), announced the launch of the global The prosecution of cryptocurrency exchange KuCoin and its two founders CHUN GAN (also known as "Michael") and KE TANG (also known as "Eric"). Relevant charges include:

1. Operating unauthorized remittance business

2. Violation of the U.S. Bank Secrecy Act

3. Deliberately failing to maintain adequate anti-money laundering (“AML”) programs designed to prevent KuCoin from being used for money laundering and terrorist financing.

4. Deliberately failing to maintain reasonable procedures for verifying customer identity

5. Do not submit any suspicious file activity reports

6. Operating unlicensed money transmission business

KuCoin is said to have leveraged its large U.S. customer base to become one of the world's largest cryptocurrency derivatives and spot exchanges, with billions of dollars in daily trading volume and trillions of dollars in annual trading volume. However, financial institutions like KuCoin that take advantage of the unique opportunity in the United States are also required to comply with U.S. laws to help identify and eliminate criminal and corrupt financing schemes, but KuCoin deliberately chose not to do so.

It is alleged that KuCoin failed to even implement basic anti-money laundering policies, resulting in it being used as a safe haven for illegal money laundering, accepting more than 5 billion US dollars, and remitting more than 4 billion US dollars in suspicious funds and criminal funds. This prosecution also extends to other cryptocurrency transactions. It sends a clear message: If you plan to serve U.S. customers, you must comply with U.S. law, plain and simple.

Acting Special Agent Darren McCormack of the New York Office of Homeland Security Investigations pointed out that KuCoin has provided services to more than 30 million customers, but the investigation found that the exchange failed to comply with the laws necessary to ensure the security and stability of the global digital banking infrastructure. ,

What other information was revealed in the indictment?

According to the disclosed indictment information, FLASHDOT LIMITED (formerly known as "Phoenixfin Limited"), PEKEN GLOBAL LIMITED and PHOENIXFIN PRIVATE LIMITED are three entities that jointly conduct business as the global cryptocurrency exchange KuCoin.

KuCoin solicits business from U.S. customers through its spot trading platform, and subsequently its futures trading platform launched in July 2019. Since its inception in 2017, KuCoin has become one of the largest cryptocurrency trading platforms in the world, with daily transaction value Billions of dollars in cryptocurrency.

KuCoin’s website touts public rankings of cryptocurrency exchanges showing it has made it into the top five globally, with one of the public rankings also ranking it as the fourth largest cryptocurrency derivatives exchange and the fifth largest cryptocurrency spot trader. Place. The U.S. Department of Justice believes that KuCoin, GAN and TANG attempted to serve, and in fact have served, numerous customers located in the United States and southern New York.

As a result, the U.S. Department of Justice believes that KuCoin needs to register its remittance business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and with the U.S. Commodity and Futures Trading Commission (CFTC) as a currency transmitter and futures commission merchant .

In addition, KuCoin must comply with applicable U.S. Bank Secrecy Act provisions, requiring the maintenance of appropriate anti-money laundering programs, including customer identity verification or know-your-customer (KYC) processes. AML and KYC programs ensure that financial institutions such as KuCoin are not used to Unlawful purposes, including money laundering.

The U.S. Department of Justice also pointed out that KuCoin tried to conceal the existence of U.S. customers in order to make KuCoin appear not to be subject to U.S. AML and KYC requirements.

According to the example, in 2022, KuCoin lied to at least one investor about the location of its customers, falsely claiming that it had no U.S. customers, when in fact KuCoin had a large U.S. customer base, and in many social media posts, KuCoin actively targeted the U.S. Customer promotion, for example, KuCoin stated in a Twitter message in April 2022, "KYC is not supported for US users, however, KuCoin does not require KYC. Normal transactions can be performed using unverified accounts." This is considered KuCoin. The no-KYC policy is integral to its growth and success.

Is the final outcome a reconciliation?

It is not uncommon for the U.S. judicial department to prosecute cryptocurrency exchanges. If you refer to other similar prosecution cases, it is not difficult to find that the final result is likely to be a settlement after paying a fine.

The most typical example is undoubtedly Binance. Late last year, Binance and its CEO CZ agreed to plead guilty to criminal and civil charges in an agreement with the U.S. Department of Justice. Binance will also pay a total of US$4.368 billion in huge fines, including US$3.4 billion from the US Treasury Department FINCEN (Financial Crimes Enforcement Agency) and US$968 million from OFAC (Office of Foreign Assets Control). This settlement also marks the end of the long-term litigation against CZ and Binance.

Just after it was revealed that it had been sued in the United States, KuCoin posted on social media that it was operating well and users' assets were safe. It had been informed of the relevant reports and was currently investigating the details through lawyers. It also added that it respects the laws and regulations of various countries and strictly abides by compliance. standard.

However, KuCoin’s native token KCS fell. Coingecko data shows that after the news of the lawsuit came out, KCS fell to the $12 range, a 24-hour drop of more than 12%.

It is worth mentioning that the U.S. Commodity Futures Trading Commission stated in its legal complaint against the operator of the cryptocurrency exchange Kucoin that Bitcoin, Ethereum and Litecoin are commodities, which may also be an alternative to the cryptocurrency industry. good news".

Judging from the general reaction of the encryption community, there is a possibility of reconciliation between the two parties in the future. Let us wait and see the subsequent development.

This article is reproduced with permission from: PANews

Review editor: Gao Jingyuan

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