KuCoin Founders Criminally Charged by US Regulators
KuCoin, one of the world’s leading cryptocurrency exchanges, and its founders Chun Gan (Michael) and Ke Tang (Eric) are facing criminal charges from US regulators. These charges stem from allegations of operating without the required licenses and failing to comply with the Bank Secrecy Act, especially concerning anti-money laundering (AML) measures. The founders may potentially face 5-10 years in prison.
KuCoin’s Alleged evasion of US Laws
KuCoin, under the leadership of Gan and Tang, is accused of deliberately disregarding US laws aimed at combating money laundering and terrorist financing. Since its establishment in 2017, KuCoin sought to attract US customers and become a major player in the global cryptocurrency exchange market, with daily trading volumes in the billions and annual volumes in the trillions. However, it is alleged that this rapid growth was achieved by ignoring crucial US regulations concerning money laundering prevention.
- U.S. Attorney Damian Williams highlighted that KuCoin and its founders intentionally obscured the fact that US users were trading on their platform.
- This lack of transparency and failure to comply with basic AML rules allowed KuCoin to operate in a legally questionable manner, potentially facilitating the flow of illicit funds.
KuCoin’s Regulatory Obligations
US officials state that KuCoin was required to follow regulations designed to prevent money laundering, which included registering with US financial authorities such as the Financial Crimes Enforcement Network (FinCEN) and the Commodity and Futures Trading Commission (CFTC). These regulations are in place to ensure that businesses like KuCoin properly identify their customers to prevent illegal financial activities.
- Despite these clear requirements, KuCoin, along with its founders, are accused of evading these legal obligations.
- It was not until July 2023, following a federal criminal investigation, that KuCoin began requesting identification from new customers.
- However, this action was deemed insufficient as it did not address the identification of millions of existing customers, including a significant number from the US.
KuCoin’s Covert Onboarding of US Customers
In addition to avoiding regulatory requirements, KuCoin allegedly made efforts to conceal its US customer base. Despite collecting data that could reveal customer locations, KuCoin reportedly made it challenging for US customers to disclose their nationality during the signup process. The company also misled investors by claiming it had no US customers, despite having a sizable user base in the country.
- Chun Gan and Ke Tang, both Chinese nationals, are facing charges related to violating the Bank Secrecy Act and operating an unlicensed money transmission business.
- KuCoin, which operates entities registered in various locations like the Cayman Islands, Seychelles, and Singapore, also faces charges that could result in up to 10 years in prison for violating the Bank Secrecy Act.
Hot Take: Conclusion for Crypto Users
As a cryptocurrency enthusiast, it is crucial to be aware of the recent developments involving KuCoin and its founders. The charges brought against them underscore the importance of complying with regulatory requirements, especially concerning anti-money laundering measures. Ensuring transparency and adherence to laws not only protects the integrity of the cryptocurrency industry but also safeguards investors and users from potential risks.
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