KuCoin, a cryptocurrency exchange, has assured its users that their assets are secure despite facing a series of criminal and civil allegations from the United States Southern District of New York (SDNY) prosecutors and the Commodity Futures Trading Commission (CFTC) on March 26. In response to the accusations, KuCoin stated that it is operating effectively and that user assets are completely safe. The exchange is currently investigating the allegations with the assistance of its legal team. KuCoin emphasized its commitment to adhering to the laws and regulations of various countries and maintaining compliance standards. Despite the allegations, KuCoin appeared unaffected, as evidenced by a tweet posted shortly after the charges were filed.
Meanwhile, KuCoin Token (KCS), the exchange’s native token, has experienced a 12% decline in value over the past 24 hours and is currently trading at $12.64. Earlier in the day, the U.S. SDNY announced criminal charges against KuCoin co-founders Chun Gan and Ke Tang, both of whom are Chinese nationals. The charges accuse them of conspiring to operate an unlicensed money-transmitting business and violating the Bank Secrecy Act by failing to maintain an adequate anti-money laundering (AML) program.
According to prosecutors, despite having significant operations in the U.S., KuCoin did not register with the CFTC or the Financial Crimes Enforcement Network as a legitimate money transmitter. Additionally, the exchange onboarded U.S. users without the necessary licensing, with these users accounting for over 18% of the exchange’s user base in 2018.
Prosecutors alleged that since its establishment in 2017, KuCoin has handled over $5 billion of suspicious and criminal proceeds, sending out over $4 billion. They claim that KuCoin’s growth and success were directly linked to its no-KYC (know-your-customer) policy.
The CFTC, in a separate complaint, stated that KuCoin provided and executed commodity derivatives and leveraged transactions without implementing the required KYC compliance procedures. The CFTC further alleged that KuCoin did not have IP verification measures in place to prevent U.S. users from accessing the platform during the relevant period.
Both criminal and civil proceedings are ongoing, and the co-founders, Chun Gan and Ke Tang, are currently evading authorities. Despite the allegations, neither prosecutors nor regulators have accused KuCoin of mishandling users’ assets.
In conclusion, KuCoin is facing legal challenges from U.S. prosecutors and regulators, but the exchange maintains that user assets are secure. The allegations center around KuCoin’s failure to comply with U.S. regulations and its no-KYC policy, which allegedly facilitated the exchange’s significant growth. Both criminal and civil proceedings are ongoing, but KuCoin has not been accused of mismanaging users’ assets.