In a significant development, federal prosecutors in Manhattan have leveled charges against KuCoin, one of the globe’s largest cryptocurrency exchanges, for allegedly flouting US anti-money laundering regulations. The exchange stands accused of failing to adequately screen customers, thereby enabling the transfer of billions of dollars in illicit funds since its inception in 2017.

Violation of Anti-Money Laundering Laws

According to prosecutors, KuCoin, headquartered in Seychelles, conducted business with US customers without registering with the Treasury Department. Furthermore, it purportedly neglected to implement requisite procedures for verifying clients’ identities, as mandated by US law.

Response from KuCoin

Responding to the allegations, KuCoin took to the social media platform X, asserting the safety of customer assets and announcing that its legal team is investigating the charges. The exchange emphasized its commitment to respecting the laws and regulations of various countries while adhering strictly to compliance standards.

Founders Charged

In addition to the charges against KuCoin, prosecutors have also implicated the exchange’s founders, Chun Gan and Ke Tang, both Chinese nationals, in conspiracy. However, the founders are reportedly at large, according to authorities.

The challenge we’re facing is not unique to KuCoin but rather typical growth and regulatory issues encountered by emerging industries. Early-stage development often sees regulatory gaps, but as the industry matures, we move towards and embrace compliance and standardization.

— Johnny_KuCoin (@lyu_johnny) March 27, 2024

Parallel to the criminal charges, the US Commodity Futures Trading Commission (CFTC) has filed a civil lawsuit against KuCoin, alleging the exchange failed to register its futures and swaps activities with the regulatory body.

Previous Legal Troubles

This isn’t the first time KuCoin has faced legal scrutiny. In December, the exchange agreed to block New York users from its platform and settle a lawsuit filed by the state for $22 million. The lawsuit accused KuCoin of failing to register in New York.

Industry Position

Despite these legal challenges, KuCoin remains a significant player in the cryptocurrency exchange arena. However, it trails behind major competitors like Binance, Coinbase, and Kraken in terms of factors such as traffic, liquidity, and trading volumes, according to data from CoinMarketCap.