KCS saw a significant decline following the money laundering charges against the exchange and its founders by the U.S. regulator.
The United States Department of Justice (DOJ) has charged crypto exchange KuCoin, alongside two of its founders Chun Gan and Ke Tang.
The regulator alleged that the exchange operated without the proper licensure and failed to adhere to the Bank Secrecy Act, particularly concerning anti-money laundering (AML) measures.
KuCoin Ignored AML Rules
According to the U.S. regulator, KuCoin deliberately ignored the anti-money laundering (AML) laws including the know-your-customer (KYC) process. The exchange also failed to register with U.S. financial authorities like the Financial Crimes Enforcement Network (FinCEN) and the Commodity and Futures Trading Commission (CFTC).
The deliberate action of KuCoin’s founders in ignoring these requirements that aim to help fight against money laundering and terrorist funding made it possible for the exchange to handle about $9 billion in funds that were suspicious and criminal proceeds.
According to the press release, the exchange despite having more than 30 million customers failed to implement the KYC process until July 2023 when became aware of a federal criminal investigation. So, they began to identify only new customers leaving out millions of of existing users.
KCS Crashes 12%
Furthermore, attorney Damian Williams said that KuCoin and its founders tried to conceal its U.S. users, lying it had no customers in the country when it has a substantial user base. KuCoin is also accused of promoting on social media as a platform where American users could trade anonymously, bypassing the need for identity verification.
“In failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds. Crypto exchanges like KuCoin cannot have it both ways. Today’s Indictment should send a clear message to other crypto exchanges: if you plan to serve U.S. customers, you must follow U.S. law, plain and simple”, the press release said.
The news of the regulator’s charges against KuCoin and its founders had a strong impact on the exchange’s native token. Within hours of the announcement, KCS experienced a crash of over 12%, dropping from $14.40 to $12.63 at press time.
