The U.S. Department of Justice (DOJ) has indicted cryptocurrency exchange KuCoin and two of its founders, Chun Gan and Ke Tang, for allegedly conspiring to operate an unlicensed money transmission business and violating the Bank Secrecy Act (BSA). According to the DOJ's announcement on March 26, Gan and Tang are accused of deliberately neglecting to establish an anti-money laundering (AML) program on the exchange, leading to its exploitation for illicit activities such as money laundering and terrorist financing. Additionally, KuCoin itself faces charges of operating an unlicensed money transfer business and breaching the BSA.
U.S. Attorney Damian Williams emphasized that KuCoin and its founders purportedly concealed the significant presence of U.S. users on the platform, enabling it to become one of the world's largest cryptocurrency derivatives and spot exchanges with substantial trading volumes. Williams highlighted the defendants' alleged failure to implement even basic AML measures, which allowed KuCoin to operate without proper oversight and provided a haven for illicit financial activities.
The DOJ's criminal charges were accompanied by a civil enforcement action by the U.S. Commodity Futures Trading Commission (CFTC) on March 26. The CFTC accused KuCoin of repeatedly violating the Commodity Exchange Act (CEA) and its regulations. The combined legal actions allege that KuCoin handled over $5 billion in suspicious and criminal funds, underscoring the magnitude of the accusations against the exchange and its founders.
Gan and Tang, who played instrumental roles in establishing KuCoin in 2017, are both Chinese citizens and are currently evading authorities. Despite the indictments, KuCoin's operational headquarters are listed as being in the Seychelles, a jurisdiction known for its favorable regulatory environment for cryptocurrency exchanges. The ongoing legal proceedings reflect the U.S. government's increasing scrutiny of cryptocurrency exchanges and their executives, with similar criminal charges recently filed against individuals associated with other major exchanges like FTX and Binance. Former FTX CEO Sam Bankman-Fried was sentenced on March 28 following his conviction on seven felony charges, while former Binance CEO Changpeng Zhao is awaiting sentencing on April 30.
