Benzinga - Editor’s note: The story has been updated with a statement from KuCoin.
The U.S. Department of Justice unsealed an indictment Tuesday against prominent crypto exchange KuCoin and two of its founders, Chun Gan and Ke Tang.
What Happened: The Justice Department alleges KuCoin conspired to operate as an unlicensed money transmitter and violated the Bank Secrecy Act by failing to enact proper anti-money laundering controls.
KuCoin and its founders engaged in a concerted effort to bypass U.S. anti-money laundering laws, allowing the platform to grow significantly by catering to a large U.S. customer base without adhering to required regulatory standards, the DOJ said in a press release.
The indictment accuses KuCoin of failing to deploy necessary anti-money laundering and know-your-customer (KYC) protocols. AML rules prevent platforms from being used for illicit activities such as money laundering and terrorist financing, the Justice Department said.
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“KuCoin allegedly deliberately chose not to implement even basic anti-money laundering policies,” stated U.S. Attorney Damian Williams, highlighting the gravity of the accusations that the exchange operated in the shadows, facilitating over $9 billion in suspicious and criminal transactions.
The indictment further details KuCoin’s alleged attempts to conceal its activities from U.S. regulators, including not requiring customer identification and falsely claiming to have no U.S. customers.
This lack of compliance has reportedly made KuCoin a haven for illicit funds, including proceeds from darknet markets, ransomware and fraud schemes, the Justice Department said.
In a statement posted on its X, formerly Twitter, account, KuCoin said it is operating normally and user assets are safe.
“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,” the statement said.
What’s Next: As the digital asset industry continues to navigate the complexities of regulatory compliance, the upcoming Benzinga’s Future of Digital Assets event on Nov. 19 provides a timely platform for discussions on the evolving regulatory landscape.
The event will offer insights into how companies can navigate these challenges while fostering innovation and growth within the legal framework.
Read Next: Ripple Faces $2B SEC Fine: Crypto Company Vows To Fight ‘Misleading’ Charges
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