KuCoin Agrees to $297 Million Settlement Over Regulatory Breach

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KuCoin, a major cryptocurrency exchange, has been hit with a $297 million settlement after admitting to a regulatory breach in the United States. The settlement includes a criminal fine of $112.9 million and a forfeiture of $184.5 million, and KuCoin will be required to exit the U.S. market for at least two years.

KuCoin Faces Major Penalty for Regulatory Breach

The U.S. Department of Justice highlighted that KuCoin’s failure to implement proper compliance measures, including anti-money laundering (AML) and know-your-customer (KYC) protocols, led to a regulatory breach.

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This allowed billions of dollars in potentially illicit transactions involving proceeds from darknet markets, ransomware, and fraud to flow through the platform.

Prosecutors also pointed out that KuCoin failed to register with the Financial Crimes Enforcement Network (FinCEN), a key regulatory requirement.

As part of the regulatory breach settlement, KuCoin’s founders, Chun Gan (Michael) and Ke Tang (Eric) have agreed to step down from their leadership roles.

They also forfeited $2.7 million each and entered into two-year deferred prosecution agreements.

Leadership Changes and the Company’s Response to the Regulatory Breach

KuCoin’s newly appointed CEO, BC Wong, emphasized the company’s commitment to addressing the regulatory breach. “This resolution signifies a new chapter for KuCoin, one that reaffirms our dedication to compliance, security, and innovation,” Wong stated.

He assured the public that the company would focus on enhancing its compliance efforts and work on reentering the U.S. market with the necessary licenses in place.

Alexander Wilson, representing Chun Gan, clarified that his client did not intend to violate U.S. laws or be involved in illicit activities. Meanwhile, David Meister, a lawyer for Ke Tang, chose not to comment.

Since its establishment in 2017, KuCoin has grown rapidly, boasting more than 30 million users across over 200 countries. However, the company has faced increasing regulatory scrutiny over its operations.

In December 2023, KuCoin agreed to block users from New York and pay a $22 million settlement to resolve a separate case related to the company’s failure to register in the state.

In a similar vein, CLS Global, a cryptocurrency firm based in the United Arab Emirates (UAE), recently pleaded guilty to charges of market manipulation and wire fraud.

The company played a role in manipulating NexFundAI, a fake token created by the Federal Bureau of Investigation (FBI) to expose fraudulent activities in the crypto market. CLS Global admitted using wash trading to inflate the token’s trading volume, misleading investors.

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Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.