Cryptocurrency exchange KuCoin claims that its users’ assets are safe amid a series of criminal and civil allegations filed by United States Southern District of New York (SDNY) prosecutors and the Commodity Futures Trading Commission (CFTC) on March 26.
“KuCoin is operating well, and the assets of our users are absolutely safe,” the exchange wrote. “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.” Just hours later, the exchange posted another tweet, appearing unfazed by March 26’s novel allegations:
“You mean KuCoin? That’s where I found my 100x CryptoGems.”
At the same time, KuCoin’s native token, KuCoin Token (KCS), has lost 12% of its value over the past 24 hours and is currently trading at $12.64 at the time of publication. Earlier in the day, the U.S. SDNY announced criminal charges against KuCoin co-founders Chun Gan and Ke Tang, both Chinese nationals. The two are accused of conspiring to operate an unlicensed money-transmitting business and “conspiring to violate the Bank Secrecy Act by willfully failing to maintain an adequate anti-money laundering (‘AML’) program.”
As told by prosecutors, despite having substantial operations in the U.S., KuCoin did not register with the CFTC or the Financial Crimes Enforcement Network as a proper money transmitter. In addition, despite its alleged facade of compliance with U.S. regulations, the exchange onboarded U.S. users without prior licensing, and they accounted for more than 18% of the exchange’s user base in 2018.
“Since its founding in 2017, KuCoin has received over $5 billion, and sent over $4 billion, of suspicious and criminal proceeds,” prosecutors wrote. “In other words, KuCoin’s no-KYC policy was integral to its growth and success.”
According to the parallel CFTC complaint, KuCoin “offered and executed commodity derivatives and leveraged, margined, or financed commodity transactions to and for people in the U.S. from approximately July 2019 to approximately June 2023, and failed to implement required know-your-customer (KYC) compliance procedures.” The CFTC alleged that KuCoin imposed no IP verification procedures to block U.S. users’ access during this time.
Both criminal and civil proceedings are ongoing, and its co-founders, Chun Gan and Ke Tang, remain at large. Despite the complaints, neither prosecutors nor regulators alleged KuCoin mismanaged users’ assets.
Related: KuCoin responds to claims of user funds being locked