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HomeLaw & PoliticsKuCoin Pleads Guilty to Operating Unlicensed Business, Agrees to $300 Million Settlement

KuCoin Pleads Guilty to Operating Unlicensed Business, Agrees to $300 Million Settlement

In a landmark decision, KuCoin, one of the world’s leading cryptocurrency exchanges, has pleaded guilty to operating an unlicensed money-transmitting business and agreed to a $300 million settlement with the United States. The announcement, made by the Department of Justice on January 27, marks a significant regulatory enforcement action in the cryptocurrency industry.

PEKEN Global Limited, operating under the KuCoin name, admitted guilt in a Manhattan federal court. As part of the settlement, KuCoin will forfeit $184.5 million and pay an additional $112.9 million fine. The exchange will also cease operations in the US for two years. Furthermore, founders Michael Gan and Eric Tang will resign from their roles, forfeit $2.7 million collectively, and will no longer be involved in KuCoin’s management or operations.

The charges stem from allegations that KuCoin failed to implement effective Anti-Money Laundering (AML) and Know Your Customer (KYC) programs. Until mid-2024, the exchange reportedly allowed users, including those in the US, to access its platform without providing identifying information, in direct violation of US laws.

Prosecutors revealed that KuCoin staff publicly stated on social media that KYC was not mandatory, reinforcing the exchange’s non-compliance with regulatory requirements. KuCoin was also accused of failing to register with the Financial Crimes Enforcement Network (FinCEN).

KuCoin’s settlement comes amid increasing scrutiny of cryptocurrency platforms. Earlier this month, rival exchange BitMEX faced a $100 million penalty for similar violations. The Justice Department highlighted that over $19 billion in settlements have been collected from crypto companies to date, emphasizing the sector’s ongoing regulatory challenges.

In a January 28 blog post, KuCoin assured users that operations outside the US remain unaffected, highlighting improvements in its compliance and security frameworks. Michael Gan, in a statement, expressed gratitude for the resolution and denied intent to violate laws, while announcing that BC Wong, KuCoin’s chief legal officer, will assume the CEO role.

This settlement underscores the growing regulatory pressure on the cryptocurrency industry as governments worldwide aim to enforce stricter compliance standards.

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