Crypto Exchange KuCoin Charged With Violating AML Laws

Key Takeaways:

  • On March 26th, the Southern District of New York announced that KuCoin, a multi-national crypto exchange, would be charged with violating U.S. laws.
  • According to federal prosecutors, KuCoin is being charged with major Anti-Money Laundering (AML) violations.
  • Despite facing severe charges in the US, KuCoin stated on that “KuCoin respects the laws and regulations of various countries and strictly adheres to compliance standards.”

What is KuCoin?

KuCoin is a popular cryptocurrency exchange founded in 2017 that serves millions of users globally. The company provides services like an in-built crypto wallet, leveraged trading, and yield-generating products.

Based in Seychelles, KuCoin provides its services to many regions but is not licensed to operate in the U.S. Nevertheless, prosecutors allege that KuCoin that KuCoin attempted to conceal the fact that “substantial numbers of U.S. users were trading” on the KuCoin platform.

Moreover, the Commodity Futures Trading Commission (CFTC) also charged KuCoin on Tuesday, alleging that KuCoin didn't register as a futures commission merchant as required, nor did the exchange implement a CFTC Know-Your-Customer (KYC) verification plan.

Prosecutors claim that KuCoin has received over $5 billion in activist funds and has sent over $4 billion of suspicious or criminal transactions.

KuCoin's Future

KuCoin is in trouble at the moment. The exchange faces serious charges that could force It to halt operations. Chun Gan and Ke Tang, KuCoin's founders, also face charges that could see them appear in a US court.

It's too soon to predict how the charges will affect KuCoin. US prosecutors will likely fine KuCoin substantial money to cover damages and persuade it to change its practices. However, the Department of Justice (DOJ) also seeks criminal charges against KuCoin. The charges could see the founders sentenced to jail time.

How Will The Charge Affect Other Crypto Exchanges

The charges brought against KuCoin will likely lead to an overhaul of many unregulated exchanges, hoping to avoid similar charges. Stricter KYC procedures will likely be implemented to ensure that traders aren't accessing the platforms from a restricted region.

No other exchanges have been mentioned regarding AML charges. However, it's likely a good time to withdraw funds stored on unregulated platforms. Stricter regulations could make the cryptocurrency market a safer space for investors. However, accessing crypto products could become more complex as regulations get more stringent.