Kucoin’s Founders Settle with US Department of Justice for Multi-Million Dollar Agreement
After an extended legal dispute, crypto-exchange Kucoin has agreed to a settlement with the United States Department of Justice. Both the exchange and its founders have admitted to breaching money transmission and Bank Secrecy Act regulations in the United States.
Last March, the Department of Justice of the Southern District of New York filed charges against Kucoin and its founders Chun Gan and Ke Tang, which have now been resolved through a settlement.
The official statement elaborated on the accusations, mentioning their involvement in operating an unlicensed money transmitting business and failing to uphold an effective anti-money laundering program to prevent illicit financial activities on Kucoin.
Kucoin’s Financial Obligations
The resolution of the case entails a significant financial package for Kucoin’s parent company, PEKEN, amounting to $297 million. From this sum, $184.5 million was considered as ‘criminally forfeited’, and a criminal fine of nearly $112.9 million was imposed.
As part of the settlement terms, Kucoin will cease its operations in the US for a minimum of two years. Moreover, the founders will forfeit $2.7 million in proceeds derived from Kucoin’s activities in the United States and are prohibited from assuming any managerial roles within the exchange. The recent announcement highlighted Kucoin’s failure to implement adequate Know Your Customer (KYC) procedures, allowing billions in suspicious transactions, potentially tied to criminal activities, to pass through the platform. These transactions included funds from darknet markets and malware operations.
Additionally, alongside the Department of Justice’s press release, the Commodity Futures Trading Commission (CFTC) issued a statement outlining charges against Kucoin for operating an unauthorized derivatives exchange in the US.
The CFTC accused Kucoin of facilitating orders for various commodity transactions without the necessary registration. In response, the commission is pursuing disgorgement, civil penalties, permanent bans on trading and registration, and a perpetual injunction to prevent future violations of the Commodity Exchange Act and CFTC regulations.