From: U.S. Department of Justice website
Compiled by: Jordan, PANews
On the evening of March 26, the U.S. Department of Justice disclosed on its official website that the cryptocurrency exchange KuCoin and its two founders were charged with violating the Bank Secrecy Act and unauthorized fund transmission. The lawsuit was filed by the U.S. Commodity Futures Trading Commission ( CFTC).
Why was KuCoin prosecuted by the US judicial department?
According to the disclosure, Damian Williams, U.S. Attorney for the Southern District of New York, and Darren McCormack, Acting Special Agent in Charge of the New York Office of Homeland Security Investigations ("HSI") announced Initiate prosecution against global cryptocurrency exchange KuCoin and its two founders CHUN GAN (aka "Michael") and KE TANG (aka "Eric"). Relevant charges include:
1. Operating unauthorized remittance business;
2. Violate the U.S. Bank Secrecy Act;
3. Deliberately failing to maintain adequate anti-money laundering (“AML”) programs designed to prevent KuCoin from being used for money laundering and terrorist financing;
4. Deliberately failing to maintain reasonable procedures for verifying customer identity;
5. Do not submit any suspicious file activity reports;
6. Operate unlicensed currency transmission business;
U.S. Attorney Damian Williams explained the indictment: “As charged in today’s indictment, KuCoin and its founders intentionally concealed the fact that a large number of U.S. users were conducting transactions on the KuCoin platform. It is alleged that , KuCoin has leveraged its massive U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars in daily trading volume and trillions of dollars in annual trading volume. However, companies like KuCoin that leverage the U.S. Unique Opportunity Financial Institutions are also required to comply with U.S. laws to help identify and eliminate criminal and corrupt financing schemes, but KuCoin deliberately chose not to do so. KuCoin allegedly failed to implement even basic anti-money laundering policies, resulting in being used for illegal money laundering A safe haven that has accepted more than $5 billion and remitted more than $4 billion of suspicious and criminal funds. This prosecution also sends a clear message to other cryptocurrency exchanges: if they plan to provide services to U.S. customers, they must comply with U.S. laws. easy to understand."
Acting Special Agent Darren McCormack of the New York Office of Homeland Security Investigations noted that KuCoin has served more than 30 million customers, but the investigation found that the exchange failed to comply with laws necessary to ensure the security and stability of the global digital banking infrastructure. ,
What other information was revealed in the indictment?
According to the disclosed indictment information, FLASHDOT LIMITED (formerly known as "Phoenixfin Limited"), PEKEN GLOBAL LIMITED and PHOENIXFIN PRIVATE LIMITED are three entities that jointly conduct business as the global cryptocurrency exchange KuCoin.
KuCoin solicits business from U.S. clients through its spot trading platform and subsequently its futures trading platform launched in July 2019. Since its inception in 2017, KuCoin has become one of the largest cryptocurrency trading platforms in the world, with billions of daily transactions worth. USD cryptocurrency. KuCoin’s website promotes public rankings of cryptocurrency exchanges showing it has made it into the top five globally, with one of the public rankings also ranking it as the fourth largest cryptocurrency derivatives exchange and the fifth largest cryptocurrency spot exchange. . The U.S. Department of Justice believes that KuCoin, GAN and TANG attempted to serve and in fact have served numerous customers located in the United States and the Southern District of New York.
As a result, the U.S. Department of Justice believes that KuCoin is required to register its remittance business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and with the U.S. Commodity and Futures Trading Commission (“CFTC”) as a money transmitter business and futures commission merchants. In addition, KuCoin must comply with applicable U.S. Bank Secrecy Act provisions, which require the maintenance of appropriate anti-money laundering programs, including customer identity verification or know-your-customer (“KYC”) processes. AML and KYC programs ensure that financial institutions such as KuCoin are not For illegal purposes, including money laundering.
The U.S. Justice Department also noted that KuCoin attempted to conceal the presence of U.S. customers in order to make KuCoin appear to be exempt from U.S. AML and KYC requirements. According to the example, in 2022, KuCoin lied to at least one investor about the location of its customers, falsely claiming that it had no U.S. customers, when in fact KuCoin had a large U.S. customer base, and in many social media posts, KuCoin actively targeted the U.S. Customer promotion, such as KuCoin stating in a Twitter message in April 2022, "KYC is not supported for US users, however, KYC is not mandatory on KuCoin. Normal transactions can be conducted using unverified accounts" - this is considered KuCoin’s no-KYC policy is integral to its growth and success.
Is the final outcome a reconciliation?
It is not uncommon for the U.S. judicial department to prosecute cryptocurrency exchanges. If you refer to other similar prosecution cases, it is not difficult to find that the final result is likely to be a settlement after paying a fine.
The most typical example is undoubtedly Binance. Late last year, Binance and its CEO CZ agreed to plead guilty to criminal and civil charges under an agreement with the U.S. Department of Justice. Binance will also pay a total of $4.368 billion in huge fines, including $3.4 billion from the U.S. Treasury Department's FINCEN (Financial Crimes Enforcement Agency) and $968 million from OFAC (Office of Foreign Assets Control). The settlement also marks the end of the long-running lawsuit against CZ and Binance.
Just after it was revealed that it had been sued in the United States, KuCoin posted on social media that it was running well and users' assets were safe. It had been informed of relevant reports and was currently investigating the details through lawyers. It also added that it respects the laws and regulations of various countries and strictly abides by compliance. standard.
However, KuCoin’s native token KCS fell. Coingecko data shows that after the news of the lawsuit came out, KCS fell to the $12 range, a 24-hour drop of more than 12%.
It is worth mentioning that the U.S. Commodity Futures Trading Commission stated in its legal complaint against the operator of the cryptocurrency exchange Kucoin that Bitcoin, Ethereum and Litecoin are commodities, which may also be an alternative to the cryptocurrency industry. good news".
Judging from the general reaction of the encryption community, there is the possibility of a settlement between the two parties in the future. Let us wait and see the subsequent development.
