“Chun Gan and Ke Tang, co-founders of KuCoin, indicted for flouting U.S. Anti-Money Laundering Laws, facing charges of unlicensed money transmission and Bank Secrecy Act violations.”
the United States Attorney’s Office for the Southern District of New York has unsealed an indictment against the prominent global cryptocurrency exchange KuCoin and two of its founders, Chun Gan and Ke Tang. This dramatic announcement unveils a grave accusation of operating an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act.
The indictment alleges that KuCoin, along with its founders, deliberately sought to conceal the fact that a substantial number of U.S. users were trading on its platform, despite being required to comply with U.S. law. It claims that KuCoin deliberately chose not to implement even basic anti-money laundering policies, allowing the exchange to operate in the shadows of the financial markets and potentially be used as a haven for illicit money laundering.
The U.S. Attorney, Damian Williams, asserts that KuCoin, with its substantial U.S. customer base, became one of the largest cryptocurrency derivatives and spot exchanges worldwide, conducting billions of dollars of daily trades and trillions of dollars of annual trade volume. However, the indictment contends that KuCoin allegedly failed to maintain an adequate anti-money laundering program, including customer identity verification, and neglected to file any suspicious activity reports.
Public statements from KuCoin and its website allegedly indicate that the exchange had grown to service over 30 million customers, with billions of dollars’ worth of cryptocurrency in daily trading volume, positioning itself as one of the largest global cryptocurrency exchange platforms. Despite this success, KuCoin, Gan, and Tang are accused of willfully flouting their U.S. anti-money laundering obligations.
The indictment further alleges that until at least July 2023, KuCoin did not require customers to provide any identifying information, and it was only after being notified of a federal criminal investigation that the exchange belatedly adopted a KYC program for new customers. However, this KYC process applied only to new customers and did not cover KuCoin’s existing customer base, including a substantial number of U.S. customers.
Chun Gan and Ke Tang, both citizens of China, face charges of conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money transmitting business, each carrying a maximum sentence of five years in prison. In addition, entities doing business as KuCoin are also charged with various offenses related to the Bank Secrecy Act and unlicensed money transmitting business, each carrying substantial maximum prison sentences.
The U.S. authorities, particularly Homeland Security Investigations (HSI), have taken a firm stance against such alleged financial crimes, emphasizing the need for cryptocurrency exchanges like KuCoin to abide by U.S. law, stating that “today, we exposed one of the largest global cryptocurrency exchanges for what our investigation has found it to truly be: an alleged multibillion-dollar criminal conspiracy.”
This indictment brings into sharp focus the growing regulatory scrutiny that cryptocurrency exchanges face and underscores the regulatory obligations that they must fulfill to ensure compliance with anti-money laundering and know-your-customer regulations. It also serves as a clear message to other crypto exchanges that serving U.S. customers requires strict adherence to U.S. laws.
In conclusion, the unsealing of the indictment against KuCoin and its founders marks a significant development in the ongoing efforts to regulate the cryptocurrency industry. The allegations, if proven, could have far-reaching implications for the future of cryptocurrency exchanges and their compliance with anti-money laundering laws and regulations.
