The operator of crypto exchange KuCoin, PEKEN Global Limited, has pleaded guilty to operating an unlicensed money transfer businessand agreed to pay $297 million in penalties to the U.S.
The charges against KuCoin were issued in March 2024 and concerned the service's failure to implement required anti- money laundering (AML) regulations, allowing cybercriminals to use the platform to launder their illicit proceeds.
According to the US Department of Justice, the platform failed to comply with applicable legal obligations to implement a “know your customer” (KYC) system and verify users’ identities.
See also: US: North Korean hackers stole $659 million worth of crypto in 2024
Furthermore, KuCoin allegedly concealed that this policy was required under US law, creating a false impression among customers that they were exempt. In fact, this concealment – deception continued until at least July 2023. KuCoin introduced a KYC system in August 2023. However, existing customers with balances on the platform were able to withdraw their funds without being required to go through the KYC process.
“For years, KuCoin avoided implementing required anti -money laundering, which were designed to identify criminals and prevent illegal transactions,” said U.S. Attorney Danielle R. Sassoon.
“As a result, KuCoin was used to facilitate billions of dollars worth of suspicious transactions and to channel proceeds from criminal activities, including proceeds from darknet markets and malware, ransomware, and scams.“.
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Now, the owner and operator of KuCoin has pleaded guilty to operating an unlicensed money transmission business, agreeing to pay $297 million.
Additionally, KuCoin will exit the US market for the next two years and its founders, Chun Gan, a/k/a “Michael” and Ke Tang, a/k/a “Eric”, will step down from KuCoin’s management and core operations team.
KuCoin has been operating in the US since 2017 and has approximately 1,500,000 registered users in the country.
The platform’s profits from 2017 to 2024 are estimated at $184.5 million. The final penalty was based on this amount. As part of the same agreement, Gan and Tang will forfeit $2.7 million, which they received from KuCoin’s operations in the US.
See also: DMM Bitcoin: North Korean hackers behind $308 million crypto theft
The settlement marks a significant step by US authorities to crack down on crypto platforms that fail to comply with federal regulations. Non-compliance not only undermines the integrity of the financial system but also facilitates illegal activities such as cybercrime and terrorist financing. KuCoin’s cooperation with regulators and the significant fine will serve as a warning to other crypto exchanges that operate in similar ways.
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In recent years, regulators around the world have stepped up scrutiny of crypto and other virtual asset service providers as part of their efforts to combat money laundering. These checks must continue to address any security issues.
Source: www.bleepingcomputer.com
