KuCoin, a popular cryptocurrency exchange, recently made headlines after pleading guilty to operating an unlicensed money-transmitting business in a settlement with the U.S. Department of Justice. The exchange agreed to exit the U.S. market for two years and pay penalties nearing $300 million. This plea comes in response to allegations that KuCoin failed to register with the Financial Crimes Enforcement Network, maintain anti-money-laundering safeguards, and report suspicious activities.
Founded in 2017 and operated by Seychelles-based Peken Global Limited, KuCoin served approximately 1.5 million U.S. users and generated around $184.5 million in fees. Prosecutors revealed that the platform allowed billions of dollars worth of suspicious transactions, including potential proceeds from darknet markets, fraud schemes, and other illicit sources. The company founders, Chun Gan (Michael) and Ke Tang (Eric), who were indicted in March 2024, will face deferred prosecution and will not be involved in the exchange’s operations for the next two years.
One of the key issues highlighted in the court documents was KuCoin’s lax approach to user identification. The exchange did not require users to provide identifying information until August 2023, and even then, employees described know-your-customer checks as optional. While KuCoin later introduced KYC measures for new registrants, existing customers could still withdraw or close positions without meeting those standards. Additionally, the exchange never filed mandatory suspicious activity reports.
In response to the settlement, KuCoin’s new CEO BC Wong expressed optimism about future compliance. He credited users’ support and emphasized the exchange’s commitment to innovation while ensuring regulatory adherence. Following the news of the plea agreement, KuCoin’s KCS token saw a 13.7% increase, indicating investor relief and renewed confidence in the platform.
As part of the plea deal, KuCoin will forfeit $184.5 million and pay an additional criminal fine of approximately $112.9 million. Each founder has also agreed to surrender $2.7 million in proceeds. Prosecutors emphasized that KuCoin’s lack of compliance facilitated the laundering of potentially criminal funds on a large scale. The resolution serves as a warning for businesses that disregard U.S. financial rules. KuCoin will be off-limits to U.S. customers for at least two years, and the two founders will not be involved in operations during that period.
Overall, the settlement underscores the importance of regulatory compliance in the cryptocurrency industry and highlights the consequences for exchanges that fail to meet these standards. Investors and users alike will be closely watching KuCoin’s actions in the coming years to see how the exchange adapts to this significant development.