KuCoin Accused of Violating Anti-Money Laundering Regulations, Involved in $9 Billion of Potentially Illicit Cryptocurrency Transactions, According to US Authorities
On Tuesday, KuCoin experienced a significant net outflow of $278 million in stablecoins, marking the highest daily outflow since the collapse of FTX in November 2022.
US prosecutors have filed charges against KuCoin, one of the world’s largest cryptocurrency exchanges, along with two of its founders, for allegedly breaching American anti-money laundering regulations.
According to federal prosecutors in Manhattan, KuCoin, which was established in September 2017, knowingly failed to establish and maintain a program aimed at preventing the platform from being utilized for unlawful activities, including terrorist financing. Additionally, the company neglected to implement adequate controls to verify the identities of its customers or report suspicious transactions on the exchange, as stated by the US Attorney’s Office for the Southern District of New York.
US Attorney Damian Williams stated, “By neglecting to implement even the most basic anti-money laundering measures, the defendants allowed KuCoin to operate in the shadows of the financial markets, serving as a sanctuary for illicit money laundering.” He further highlighted that the exchange had received over $5 billion and transferred more than $4 billion in suspicious and criminal funds.
On Tuesday, the Commodity Futures Trading Commission, responsible for overseeing derivatives markets, also filed a case against the firm.
The announcement sparked a rush to withdraw funds from KuCoin. According to data from CryptoQuant, the exchange experienced a net outflow of $278 million in stablecoins on Tuesday, marking the highest single-day outflow since the November 2022 collapse of FTX.
Responding to the allegations, KuCoin released a statement asserting, “KuCoin is functioning properly, and our users’ assets are completely secure.” The company acknowledged the reports and stated that it is currently investigating the details with the assistance of legal counsel. KuCoin also emphasized its commitment to complying with the laws and regulations of various countries and maintaining strict adherence to compliance standards.
According to the prosecutors, the company allegedly attempted to hide the fact that many American customers utilized the platform, aiming to assert its exemption from US regulations. “This indictment should serve as a direct message to other cryptocurrency exchanges: compliance with US law is non-negotiable if you intend to cater to US customers,” Williams stated.
According to CoinMarketCap, KuCoin ranks among the world’s largest spot cryptocurrency exchanges, boasting a daily trading volume exceeding $2 billion.
