KuCoin Faces Nearly $300M Fine for Unlicensed Money Transmission

One of the largest cryptocurrency exchanges, KuCoin, has pleaded guilty to allegations of engaging in unlicensed money transmission and agreed to pay a hefty fine of nearly $300 million. The United States Department of Justice (DOJ) noted that PEKEN Global Limited, operating business as KuCoin, pleaded guilty in a Manhattan federal court as part of a settlement agreement.

The fine stems from an ongoing investigation by U.S. regulators, who alleged that KuCoin violated U.S. anti-money laundering (AML) laws by neglecting to establish adequate AML and know-your-customer (KYC) procedures. These policies are designed to prevent the platform from being used for money laundering and terrorism financing.

Additionally, the exchange failed to report suspicious transactions and did not register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

A 2-Years Market Absence

PEKEN also agreed that KuCoin would exit the U.S. market for a minimum of two years. In addition, two of the exchange’s founders, Chun Gan (also known as Michael) and Ke Tang (Eric), who were indicted alongside PEKEN in March 2024, will be removed from any involvement in the company’s management or operations. The plea agreement also includes the forfeiture of $184.5 million and a fine of $112.9 million, totaling approximately $297.4 million.

Commenting on the latest development, 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, malware, ransomware, and fraud schemes.

The U.S. attorney added that the guilty plea and penalties highlight the consequences of ignoring these laws and permitting illegal activities to persist. 

KuCoin’s Legal Battles Continue

KuCoin’s legal troubles are not entirely new. In March, prosecutors charged the exchange, Gan and Tang, with not implementing effective AML and KYC programs. The Justice Department stated that until around July 2024, the platform did not mandate that customers submit any identifying information. 

The authorities further said that KuCoin employees consistently claimed on social media that KYC was not required on the exchange, even in response to customers who had identified themselves as being based in the U.S.

Following the events, KuCoin only implemented a mandatory KYC program in August 2023 for new customers and for existing customers wishing to continue using the platform’s services. However, the exchange failed to apply this essential KYC process to existing customers who only wanted to withdraw funds or close positions despite being required to do so.