US prosecutors try to send warning to cryptocurrency world with KuCoin prosecution

Mar 26, 2024, 10:59 AM

NEW YORK (AP) — A top U.S. prosecutor announced criminal charges Tuesday against a once-ascending company in the cryptocurrency world and two of its founders in a bid to send a message to other players in the industry to follow U.S. laws.

U.S. Attorney Damian Williams said conspiracy charges against KuCoin and two executives should warn other crypto exchanges that they cannot serve U.S. customers without following U.S. laws. An indictment in Manhattan federal court said the company and its founders tried to conceal the existence of its U.S. customer base.

In December, New York Attorney General Letitia James secured a payout of more than $22 million from KuCoin to refund $16.7 million to over 150,000 New York investors and provide New York state with over $5.3 million. KuCoin was also required to cease New York operations after falsely representing itself as a crypto exchange without registering as a securities and commodities broker-dealer, James said.

Williams said in a release that KuCoin, formed in 2017, “took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.”

He said the company deliberately chose to flout U.S. laws designed to help identify and eliminate crime and corrupt financing schemes on financial platforms. As a result, authorities said, the company was used as a vehicle to launder large sums of proceeds from criminal malware, ransomware and fraud schemes.

KuCoin failed to implement even basic anti-money laundering policies as it let customers process over $4 billion of suspicious and criminal funds as KuCoin operated in the shadows of the financial markets and provided a haven for illicit money laundering, Williams said.

Darren McCormack, who heads the New York office of Homeland Security Investigations, said the prosecution exposes one of the largest global cryptocurrency exchanges as a multibillion-dollar criminal conspiracy.

“KuCoin grew to service over 30 million customers, despite its alleged failure to follow laws necessary to ensuring the security and stability of our world’s digital banking infrastructure,” McCormack said.

In a statement posted on social media, the company said it was “operating well, and the assets of our users are absolutely safe.”

It added: “We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respect the laws and regulations of various countries and strictly adheres to compliance standards.”

Also on social media, the company’s chief executive, identifying himself as “Johnny,” said the “regulatory matter related to KuCoin has come to my attention. While we’re working on it, the platform is unaffected and operating normally as usual. Your assets are safe and sound with us. Our team and I will provide timely updates about the progress.”

Charged along with the company were Chun Gan, 34, and Ke Tang, 39, two of the company’s founders and both citizens of China. Charged with conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money transmitting business, they remain at large.

The Bank Secrecy Act charge stemmed from the failure of the men to maintain an adequate anti-money laundering program to prevent KuCoin from being used for money laundering and terrorist financing, along with failing to verify customers and failing to file any suspicious activity reports common in the financial industry, prosecutors said.

Three companies doing business as KuCoin were incorporated in the Cayman Islands, the Republic of Seychelles and Singapore. They were also facing conspiracy charges.

On the KuCoin website Tuesday, U.S. residents were greeted with the following message: “Based on your IP address, we currently do not provide services in your country or region due to local laws, regulations, or policies. We apologize for any inconvenience this may cause. If you are from a region where our services are available, please access our platform from a supported location to complete KYC verification.”

The company claims it has 30 million registered users across more than 200 countries and regions worldwide.

United States News

A anti-abortion supporter stands outside the House chamber, Wednesday, April 17, 2024, at the Capit...

Associated Press

Democrats clear path to bring proposed repeal of Arizona’s near-total abortion ban to a vote

Democrats in the Arizona Senate cleared a path to bring a proposed repeal of the state’s near-total ban on abortions to a vote.

2 hours ago

Associated Press

Oklahoma man arrested after authorities say he threw a pipe bomb at Satanic Temple in Massachusetts

BOSTON (AP) — An Oklahoma man was arrested Wednesday after authorities accused him of throwing a pipe bomb at the Massachusetts headquarters of a group called The Satanic Temple. The Salem-based group says on its website that it campaigns for secularism and individual liberties, and that its members don’t actually worship Satan. Sean Patrick Palmer, […]

4 hours ago

Associated Press

Ellen Ash Peters, first female chief justice of Connecticut Supreme Court, dies at 94

HARTFORD, Conn. (AP) — Ellen Ash Peters, who was the first woman to serve as Connecticut’s chief justice and wrote the majority opinion in the state Supreme Court’s landmark school desegregation ruling in 1996, has died. She was 94. Peters, who also was the first female faculty member at Yale Law School, passed away Tuesday, […]

6 hours ago

Associated Press

Vermont farms are still recovering from flooding as they enter the growing season

BERLIN, Vt. (AP) — Hundreds of Vermont farms are still recovering from last July’s catastrophic flooding and other extreme weather as they head into this year’s growing season. Dog River Farm, in Berlin, Vermont, lost nearly all its produce crops in the July flooding. The farm removed truckloads of river silt and sand from the […]

6 hours ago

Associated Press

Appeals court leaves temporary hold on New Jersey’s county line primary ballot design in place

PHILADELPHIA (AP) — A federal appeals court on Wednesday affirmed a lower court’s decision to order New Jersey Democrats scrap a ballot design widely viewed as helping candidates with establishment backing. The 3rd Circuit Court of Appeals considered a slimmed-down appeal brought by the Camden County Democrats after the county clerks — the officials charged […]

7 hours ago

Secretary of Homeland Security Alejandro Mayorkas arrives to testify before a Senate subcommittee o...

Associated Press

Senate dismisses two articles of impeachment against Homeland Security secretary, ends trial

The Senate dismissed impeachment charges against Alejandro Mayorkas, ending House Republicans' bid to remove the Homeland Security secretary.

7 hours ago

Sponsored Articles



Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.


Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

(KTAR News Graphic)...

Boys & Girls Clubs

KTAR launches online holiday auction benefitting Boys & Girls Clubs of the Valley

KTAR is teaming up with The Boys & Girls Clubs of the Valley for a holiday auction benefitting thousands of Valley kids.

US prosecutors try to send warning to cryptocurrency world with KuCoin prosecution