Posted on: January 28, 2025 02:00 PM

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Kucoin pleads guilty to unlicensed money transmission charge and agrees to pay penalties totaling nearly USD300 million

U.S. Attorney Danielle R. Sassoon said: “For years, KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions. As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes.  Today’s guilty plea and penalties show the cost of refusing to follow these laws and allowing unlawful activity to continue.”

 

According to admissions and court documents, KuCoin was founded in or about September 2017. Since its founding in 2017, KuCoin has become one of the largest global cryptocurrency exchange platforms, with more than 30 million customers and billions of dollars’ worth of cryptocurrency in daily trading volume.  Between in or about September 2017 and in or about March 2024, the date of the Indictment, KuCoin served approximately 1.5 million registered users who were located in the U.S., and earned at least approximately $184.5 million in fees from those U.S. registered users.

KuCoin’s exchange platform allows registered users to place orders for spot trades in cryptocurrencies, including Bitcoin, Ethereum, and others, and orders for derivative products, including futures contracts, tied to the value of Bitcoin and other cryptocurrencies.  As a result of its operation of this business, KuCoin has, at all relevant times, been a money transmitting business required to register with FinCEN and reported suspicious transactions.  As a money transmitting business, KuCoin was required to comply with applicable Bank Secrecy Act provisions requiring maintenance of an adequate AML program, including conducting KYC processes.  AML and KYC programs ensure that financial institutions, such as KuCoin, do not become havens for money laundering and other criminal actors.

Despite these obligations and its substantial presence in the U.S. market, KuCoin failed to implement an adequate KYC program.  Indeed, until at least July 2023, KuCoin did not require customers to provide any identifying information.  KuCoin employees repeatedly stated on public social media sites that KYC was not mandatory on KuCoin, including in response to posts from customers who had identified themselves as being in the U.S.  It was only in August 2023 that KuCoin adopted a mandatory KYC program for new customers and existing customers who wanted to continue to actively participate in KuCoin’s services.  However, KuCoin did not impose this necessary KYC process on existing customers that wanted to continue to use KuCoin’s services only to withdraw or close positions, which it was required to do.  KuCoin also never registered with FinCEN as a money transmitting business or filed any required suspicious activity reports.

As a result of KuCoin’s failure to maintain the required AML and KYC programs, KuCoin was used to transmit billions in suspicious transactions and potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes.

From DOJ