In December, New York Attorney General Letitia James secured a payout of more than $22 million from KuCoin to refund $16.7 million to over 150,000 New York investors and provide New York state with over $5.3 million. KuCoin was also required to cease New York operations after falsely representing itself as a crypto exchange without registering as a securities and commodities broker-dealer, James said.
Williams said in a release that KuCoin, formed in 2017, “took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.”
He said the company deliberately chose to flout U.S. laws designed to help identify and eliminate crime and corrupt financing schemes on financial platforms. As a result, authorities said, the company was used as a vehicle to launder large sums of proceeds from criminal malware, ransomware and fraud schemes.
KuCoin failed to implement even basic anti-money laundering policies as it let customers process over $4 billion of suspicious and criminal funds as KuCoin operated in the shadows of the financial markets and provided a haven for illicit money laundering, Williams said.
Darren McCormack, who heads the New York office of Homeland Security Investigations, said the prosecution exposes one of the largest global cryptocurrency exchanges as a multibillion-dollar criminal conspiracy.
“KuCoin grew to service over 30 million customers, despite its alleged failure to follow laws necessary to ensuring the security and stability of our world’s digital banking infrastructure,” McCormack said.
In a statement posted on social media, the company said it was “operating well, and the assets of our users are absolutely safe.”
It added: “We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respect the laws and regulations of various countries and strictly adheres to compliance standards.”
Also on social media, the company’s chief executive, identifying himself as “Johnny,” said the “regulatory matter related to KuCoin has come to my attention. While we’re working on it, the platform is unaffected and operating normally as usual. Your assets are safe and sound with us. Our team and I will provide timely updates about the progress.”
Charged along with the company were Chun Gan, 34, and Ke Tang, 39, two of the company’s founders and both citizens of China. Charged with conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money transmitting business, they remain at large.
The Bank Secrecy Act charge stemmed from the failure of the men to maintain an adequate anti-money laundering program to prevent KuCoin from being used for money laundering and terrorist financing, along with failing to verify customers and failing to file any suspicious activity reports common in the financial industry, prosecutors said.
Three companies doing business as KuCoin were incorporated in the Cayman Islands, the Republic of Seychelles and Singapore. They were also facing conspiracy charges.
On the KuCoin website Tuesday, U.S. residents were greeted with the following message: “Based on your IP address, we currently do not provide services in your country or region due to local laws, regulations, or policies. We apologize for any inconvenience this may cause. If you are from a region where our services are available, please access our platform from a supported location to complete KYC verification.”
The company claims it has 30 million registered users across more than 200 countries and regions worldwide.
https://www.washingtonpost.com/business/2024/03/26/kucoin-cryptocurrency-charges-arrests/e1b6bd56-eb9a-11ee-8f2c-380a821c02db_story.html
