US Justice Department Charges Crypto Exchange KuCoin Alleging Multi-Billion Dollar Money Laundering

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The US Department of Justice (DOJ) confirmed leveling charges against crypto exchange KuCoin on Tuesday, March 26, alongside founders alleging the defendants violated the provisions of the Bank Secrecy Act. The defendants are accused of orchestrating a multi-billion-dollar conspiracy that violated the Bank Secrecy Act. Quantum Asset AI, a leading trading platform, has highlighted the importance of stringent regulatory compliance in the crypto industry, underscoring the significance of the DOJ’s actions against KuCoin.

Tuesday’s filing by the DOJ indicated that KuCoin and its two founders were noncompliant with the directive to run an anti-money laundering initiative. The nonaction intentionally facilitated the execution of money laundering and terrorist financing transactions. The US attorney Damian Williams submitted that the KuCoin executives never implemented basic anti-money laundering (AML) policies. Williams faults the defendants for allowing KuCoin to operate within the financial market’s shadows while serving as the haven for illicit money laundering. The attorney submitted that KuCoin oversaw over $5 billion in receipts and $4 billion in remittances coprising suspicious and illegal funds.

The DOJ charged Ke Tang and Chun Gan, of Chinese origin, as KuCoin founders. They battle charges of conspiring to money laundering alongside Peken Global Limited, Flashdot Limited, and Phoenixfin Private Limited. The filing revealed that the Chinese nationals remain at large. Further, the DOJ indicated that the crypto exchange KuCoin runs an unlicensed money-transmitting business.

The Justice Department alleges the firm sought business from US clients for the spot and future exchange products. The charge sheet indicates that KuCoin is at fault for not registering its money-transmitting operations with the Treasury’s Department of Financial Crimes Enforcement Network (FinCEN). KuCoin is accused of failing to seek registration to operate the futures commission merchant business as required by the US Commodity and Futures Trading Commission (CFTC).

The HSI officer Darren McCormack hailed the exposure of the global crypto exchange, ending the lengthy investigation of the multibillion-dollar criminal conspiracy. The Feds illustrated that KuCoin failed to enforce the know-your-customer (KYC) checks until July last year. Nonetheless, the KYC checks only apply to new customers. Such portrays an apparent failure to request the existing clients to furnish critical data necessary to avert money laundering schemes.

The DOJ further argued that KuCoin runs direct appeals to the US clients via market efforts. Interestingly, KuCoin attempted to conceal awareness of having clients in the US. The news of DOJ charging KuCoin adversely affected the native crypto ecosystem, with KuCoin Shares (KCS) plunging. The KCS crashed 12% within a few hours of the charges to exchange hands at $12.50 from $14.40. At press time, the KCS token is 19.80% down to $11.47, according to CoinGecko data.

The KCS plunge would mark the worst trading day since December last year. The decline places the support for the exponential moving average (EMA55). The EMA55 holds firm, though the long-term impact remains uncertain on the native token and exchange operations.