The US Department of Justice announced last night (26) that KuCoin, a cryptocurrency exchange, and its founders, Chun Gan and Ke Tang, have been indicted by the Southern District of New York Attorney’s Office for violating US anti-money laundering regulations and engaging in unauthorized money transmission business.
Summary:
KuCoin exchange and its founders indicted by the US Department of Justice for violating the Bank Secrecy Act and money laundering regulations.
Background:
Kucoin pays $22 million in settlement with the New York Attorney’s Office! CEO: Compliance is the reason for withdrawing from the local market.
Table of Contents:
Prosecutors: KuCoin and its founders intentionally concealed a large number of US users.
CFTC accuses KuCoin of operating an illegal exchange.
KuCoin’s response: Exchange operates well.
Community reaction.
Is there a run on KuCoin?
KuCoin previously paid $22 million to settle with the New York Attorney’s Office.
KuCoin’s native token, KCS, falls.
KuCoin ranks 7th among global centralized exchanges.
Last night (26),
The US Department of Justice
released a significant announcement that KuCoin, one of the top ten centralized cryptocurrency exchanges globally, and its founders, Chun Gan (also known as Michael) and Ke Tang (also known as Eric), have been indicted by the Southern District of New York Attorney’s Office. The reason for the indictment is that KuCoin and its two founders violated US anti-money laundering regulations and engaged in unauthorized money transmission business.
Prosecutors: KuCoin and its founders intentionally concealed a large number of US users.
According to the Department of Justice’s announcement, US prosecutors believe that both KuCoin and its founders were aware of their obligations under US anti-money laundering regulations but deliberately chose to ignore them:
In response, Damian Williams, the US prosecutor, said:
At the same time, Darren McCormack, an investigator from the New York Homeland Security Investigations Office, also accused:
However, it is worth mentioning that the Department of Justice also added in the announcement that although prosecutors have filed charges against KuCoin and its founders, they will be considered innocent unless evidence proves otherwise.
At the same time, the US Commodity Futures Trading Commission (CFTC) has filed a civil lawsuit with the US Southern District of New York Court, accusing Mek Global Limited, PhoenixFin PTE Ltd., Flashdot Limited, and Peken Global Limited of jointly operating KuCoin and repeatedly violating the Commodity Exchange Act (CEA) and CFTC regulations. The indictment states:
In the lawsuit against KuCoin, the CFTC stated that it is seeking the return of illegal gains, civil penalties, permanent trading and registration bans, as well as permanent bans on further violations of CEA and CFTC regulations.
KuCoin’s response: Exchange operates well.
In response, KuCoin quickly responded at 23:40 last night:
Community reaction.
Currently, KuCoin has not provided detailed explanations regarding this matter but has assured that the exchange is operating normally. However, some community users have expressed that these accusations may be intentional suppression by US regulatory agencies against the exchange:
Is there a run on KuCoin?
After the news of the indictment was exposed, some community members were concerned about whether it would trigger a run on the exchange and whether the security of customers’ funds would be threatened.
As of now, there have been reports of slow withdrawal speeds for asset withdrawals, but apart from some currencies, there doesn’t seem to be any suspension of withdrawals.
However, there have indeed been large outflows of assets. According to Defillama data, KuCoin’s outflow in the past 24 hours reached $169 million, making it the second-largest outflow among the top ten exchanges. Dynamic Zone reminds users who have assets on KuCoin to consider transferring them for security purposes.
KuCoin previously paid $22 million to settle with the New York Attorney’s Office.
Based on past experience, if KuCoin wants to continue its operations, it may reach a settlement with US regulators, pay fines, and withdraw from the US market. However, this still needs continuous observation.
In fact, KuCoin was already sued by the New York State Attorney General Letitia James in March last year. It was accused of being a cryptocurrency trading platform that allowed investors to trade cryptocurrencies, including ETH and LUNA, through its website and application without registering with the US Securities and Exchange Commission (SEC) or the US Commodity Futures Trading Commission (CFTC). It promoted unregistered securities on its platform, including its lending and pledging product, KuCoin Earn.
At that time, KuCoin reached a settlement with the New York State Attorney’s Office at the end of last year, paying a total of $22 million in fines and agreeing to withdraw from the New York market.
KuCoin’s native token, KCS, falls.
Affected by this information, KuCoin’s native token, KCS, quickly fell from around $14.3 last night to $12.5, a decrease of 12.44% in the past 24 hours.
KuCoin ranks 7th among global centralized exchanges.
KuCoin was founded in September 2017 and is headquartered in Seychelles. According to CoinMarketCap data, KuCoin is currently ranked as the 7th largest centralized exchange globally with a comprehensive rating of 6.9. It has a trading volume of over $2.3 billion in the past 24 hours and offers trading for up to 784 different cryptocurrencies.
Global exchange rankings. Source: CoinMarketCap
Further reading:
Global & Taiwan cryptocurrency exchange rankings for 2024: Trading volume, security, currencies… A must-read for novice cryptocurrency investors.
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