Last July, a criminal investigation into the exchange was opened by the US authorities

Analyst Colin Wu: KuCoin management started discussing the sale of the exchange in 2023

27.03.2024 - 12:44

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4 min

What’s new? KuCoin’s management was considering ceasing operations and selling the crypto exchange in 2023 amid the opening of a criminal investigation into its operations in the United States and a number of investigations in China. This was reported by analyst Colin Wu, citing three independent anonymous sources. On March 26, the US Justice Department accused KuCoin and its founders Chun Gan and Ke Tang of running an unlicensed money transfer business and violating anti-money laundering regulations.

Source: Twitter.com

What else is known? The US authorities accused the senior executives of conspiring to conduct an unlicensed money transfer business and violating the Bank Secrecy Act by willfully failing to maintain an adequate AML program. For example, the exchange failed to maintain customer identification procedures (KYC) and failed to report suspicious fund transfers.

It was not until July 2023, after a criminal investigation began, that the exchange implemented a KYC procedure for new customers, which, however, did not apply to millions of already registered users, including US residents.

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Prosecutor Damian Williams noted that KuCoin capitalized on the unique opportunities to operate in the US while willfully failing to comply with local laws aimed at detecting and disrupting illegal financing schemes. By “failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds,”

According to the prosecution, the platform received among other things the proceeds of darknet marketplace merchants, developers of ransomware, and organizers of fraudulent schemes.

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Since its founding in 2017, KuCoin has become one of the largest global crypto exchanges with more than 30 million customers and billions of dollars in daily trading volume. Yet throughout its operation, it fell under the category of a money transfer business and had to register with the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). As of July 2019, after expanding its product list, registration with the Commodities and Futures Trading Commission (CFTC) was also required.

“KuCoin’s no-KYC policy was integral to its growth and success,” the indictment emphasizes.

Both executives of the exchange remain at large.

Over the past 24 hours, users withdrew over $865 million from KuCoin.

Earlier, Indian authorities also accused the exchange of failing to comply with AML norms, after which its app was removed from the local App Store.

Last year, KuCoin agreed to pay a $22 million fine and cease operations in New York to settle charges by state Attorney General Letitia James of operating without registration and offering unregistered securities.

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