Kucoin settles with DOJ as founders face hefty penalties. (Photo by Craig Hudson for The Washington Post via Getty Images)
Key Takeaways
Leading crypto exchange KuCoin has agreed to pay $300 million to resolve charges brought by the U.S. Department of Justice (DOJ).
The exchange admitted to operating as an unlicensed money-transmitting business and processing billions in potentially illicit transactions.
In its official statement , the DOJ announced that KuCoin’s operator, Peken Global Ltd., pleaded guilty to failing to comply with U.S. financial laws.
Prosecutors alleged that KuCoin did not register with the Financial Crimes Enforcement Network (FinCEN) and neglected to implement basic anti-money laundering (AML) and know-your-customer (KYC) protocols, leaving the exchange vulnerable to misuse.
“Due to KuCoin’s failure to maintain the necessary AML and KYC programs, KuCoin was used to transmit billions in suspicious transactions and potentially criminal proceeds,” the DOJ said. These included proceeds from ransomware attacks, fraud schemes, and darknet markets.
Founded in 2017, KuCoin amassed over 1.5 million registered U.S. customers by 2024, yet only implemented mandatory KYC procedures in August 2023.
Prior to that, customers could trade without providing identification. KuCoin employees even publicly reassured users on social media that KYC was optional, including for those openly identifying as U.S. residents.
Under the settlement, KuCoin will pay $113 million in fines and forfeit $184.5 million in assets. Additionally, the exchange must exit the U.S. market for at least two years.
The deal also requires KuCoin’s founders, Chun “Michael” Gan and Ke “Eric” Tang, to step down from their roles. Each agreed to forfeit $2.7 million in personal funds tied to KuCoin’s U.S. operations.
KuCoin addressed the settlement in an official press release, mascarding it as a positive outcome of the case. The exchange said the lawsuit had been resolved with a favorable outcome.
“The DOJ has agreed to dismiss all charges against me and my co-founder, Eric Tang, upon satisfaction of certain conditions,” said Gan in the press release.
However, the DOJ’s account sharply contrasted with KuCoin’s upbeat tone. The agency accused the exchange of consistently violating U.S. anti-money laundering laws and turning a blind eye to criminal activity on its platform.
KuCoin Strikes $300M Deal With DOJ, Founders Agree To Exit Operations – CCN.com
