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United States Fines Cryptocurrency Exchange KuCoin Parent PEKEN & 2 Founders $297 Million after Pleading Guilty to Operating Unlicensed Remittance Business & Money Laundering Failures Including Receiving $5 Billion of Funds & Sending $4 Billion of Suspicious & Criminal Funds, KuCoin 2 Founders Chun Gan (Michael) & Ke Tang (Eric) Will No Longer Have Roles in KuCoin, KuCoin Will Exit United States Market for at Least 2 Years, KuCoin Founded in 2017 & Has 30 Million Customers, 1.5 Million Customers in United States & Earned at Least $187 Million in Fees
30th January 2025 | Hong Kong
The United States Department of Justice (DoJ) has fined cryptocurrency exchange KuCoin parent PEKEN & 2 founders $297 million after pleading guilty to operating an unlicensed remittance business & money laundering failures including receiving $5 billion of funds & sending $4 billion of suspicious & criminal funds. KuCoin 2 founders Chun Gan (Michael) & Ke Tang (Eric) will no longer have any roles in KuCoin, and KuCoin will exit the United States market for at least 2 years. KuCoin was founded in 2017 and has 30 million customers. KuCoin has 1.5 million customers in the United States, and had earned at least $187 million in fees. DoJ (27/1/25): “Danielle Sassoon, the United States Attorney for the Southern District of New York, announced that PEKEN GLOBAL LIMITED (“PEKEN”), a Seychelles-based entity that, since at least September 2019, has operated KuCoin, one of the largest cryptocurrency exchanges in the world, pled guilty today to one count of operating an unlicensed money transmitting business. KuCoin flouted U.S. anti-money laundering laws by failing to implement effective anti-money laundering (“AML”) and know-your-customer (“KYC”) programs designed to prevent KuCoin from being used for money laundering and terrorist financing, failing to report suspicious transactions, and failing to register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). In connection with today’s guilty plea, PEKEN agreed to pay monetary penalties totaling more than $297 million. PEKEN further agreed that KuCoin will exit the U.S. market for at least the next two years, and that two of KuCoin’s founders, Chun Gan, a/k/a “Michael,” and Ke Tang, a/k/a “Eric,” who were indicted along with Peken in March 2024, will no longer have any role in KuCoin’s management or operations. According to admissions and court documents, KuCoin was founded in or about September 2017. Since its founding in 2017, KuCoin has become one of the largest global cryptocurrency exchange platforms, with more than 30 million customers and billions of dollars’ worth of cryptocurrency in daily trading volume. Between in or about September 2017 and in or about March 2024, the date of the Indictment, KuCoin served approximately 1.5 million registered users who were located in the U.S., and earned at least approximately $184.5 million in fees from those U.S. registered users. KuCoin’s exchange platform allows registered users to place orders for spot trades in cryptocurrencies, including Bitcoin, Ethereum, and others, and orders for derivative products, including futures contracts, tied to the value of Bitcoin and other cryptocurrencies. As a result of its operation of this business, KuCoin has, at all relevant times, been a money transmitting business required to register with FinCEN and reported suspicious transactions. As a money transmitting business, KuCoin was required to comply with applicable Bank Secrecy Act provisions requiring maintenance of an adequate AML program, including conducting KYC processes. AML and KYC programs ensure that financial institutions, such as KuCoin, do not become havens for money laundering and other criminal actors. Despite these obligations and its substantial presence in the U.S. market, KuCoin failed to implement an adequate KYC program. Indeed, until at least July 2023, KuCoin did not require customers to provide any identifying information. KuCoin employees repeatedly stated on public social media sites that KYC was not mandatory on KuCoin, including in response to posts from customers who had identified themselves as being in the U.S. It was only in August 2023 that KuCoin adopted a mandatory KYC program for new customers and existing customers who wanted to continue to actively participate in KuCoin’s services. However, KuCoin did not impose this necessary KYC process on existing customers that wanted to continue to use KuCoin’s services only to withdraw or close positions, which it was required to do. KuCoin also never registered with FinCEN as a money transmitting business or filed any required suspicious activity reports. As a result of KuCoin’s failure to maintain the required AML and KYC programs, KuCoin was used to transmit billions in suspicious transactions and potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes. Today the department also agreed to defer prosecution against KuCoin’s two indicted co-founders, Gan and Tang, for a period of two years. In addition to the guilty plea, PEKEN, a Seychelles-based entity, also agreed to criminally forfeit $184.5 million and pay a criminal fine of approximately $112.9 million. Additionally, Gan and Tang have each agreed to forfeit approximately $2.7 million in funds received as a result of KuCoin’s operations in the U.S.” In 2024 March, United States regulators & prosecutors have charged the large cryptocurrency exchange KuCoin & 2 founders for money laundering failures including receiving $5 billion of funds & sending $4 billion of suspicious & criminal funds.
“ United States Fines Cryptocurrency Exchange KuCoin Parent PEKEN & 2 Founders $297 Million after Pleading Guilty to Operating Unlicensed Remittance Business & Money Laundering Failures Including Receiving $5 Billion of Funds & Sending $4 Billion of Suspicious & Criminal Funds, KuCoin 2 Founders Chun Gan (Michael) & Ke Tang (Eric) Will No Longer Have Roles in KuCoin, KuCoin Will Exit United States Market for at Least 2 Years, KuCoin Founded in 2017 & Has 30 Million Customers, 1.5 Million Customers in United States & Earned at Least $187 Million in Fees “
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United States Charged Large Cryptocurrency Exchange KuCoin & 2 Founders for Money Laundering Failures Including Receiving $5 Billion of Funds & Sending $4 Billion of Suspicious & Criminal Funds
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30th March 2024 – United States regulators & prosecutors have charged a large cryptocurrency exchange KuCoin & 2 founders for money laundering failures including receiving $5 billion of funds & sending $4 billion of suspicious & criminal funds. Commodity Futures Trading Commission: “The complaint charges KuCoin illegally dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions; solicited and accepted orders for commodity futures, swaps, and leveraged, margined, or financed retail commodity transactions without registering with the CFTC as a futures commission merchant (FCM); failed to diligently supervise its FCM activities; operated a facility for the trading or processing of swaps without registering with the CFTC as a swap execution facility (SEF) or designated contract market (DCM); and failed to implement an effective customer identification program (CIP).” Case Background: “According to the complaint, KuCoin offered and executed commodity derivatives and leveraged, margined, or financed commodity transactions to and for people in the U.S. from approximately July 2019 to approximately June 2023, and failed to implement required know-your-customer (KYC) compliance procedures. The complaint further alleges that although KuCoin claimed to have implemented KYC procedures, those procedures were a sham and did not prevent U.S. customers from trading commodity interests and derivatives on the platform. The complaint also alleges people who identified themselves as being U.S. customers were permitted to trade commodity futures, swaps, and leveraged, margined, or financed commodity transactions on the exchange, in violation of the CEA and CFTC regulations. KuCoin failed to impose any IP address restrictions during the relevant period to prevent U.S. customers from trading commodity interests or account for commonly used technology such as virtual private networks (VPNs) that could potentially circumvent IP address restrictions.” More info below:
United States Charged Large Cryptocurrency Exchange KuCoin & 2 Founders for Money Laundering Failures Including Receiving $5 Billion of Funds & Sending $4 Billion of Suspicious & Criminal Funds
26th March 2024 – The Commodity Futures Trading Commission today announced it filed a civil enforcement action in the U.S. District Court for the Southern District of New York charging Mek Global Limited, PhoenixFin PTE Ltd., Flashdot Limited, and Peken Global Limited, which collectively operate a centralized digital asset exchange under the name KuCoin, with multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations.
- The complaint charges KuCoin illegally dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions; solicited and accepted orders for commodity futures, swaps, and leveraged, margined, or financed retail commodity transactions without registering with the CFTC as a futures commission merchant (FCM); failed to diligently supervise its FCM activities; operated a facility for the trading or processing of swaps without registering with the CFTC as a swap execution facility (SEF) or designated contract market (DCM); and failed to implement an effective customer identification program (CIP).
- In its continuing litigation against KuCoin, the CFTC seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations, as charged.
“For too long, some offshore crypto exchanges have followed a now-familiar playbook by offering derivative products and falsely claiming people in the United States cannot use their platforms, when in reality, anyone in the U.S. with commonly used technology can trade without providing basic customer identifying information,” said Director of Enforcement Ian McGinley.
“As made clear by the CFTC’s action today and its previous enforcement actions, the CFTC’s playbook should also now be familiar – the CFTC will charge such entities with failing to register with the CFTC and failing to comply with the agency’s rules that protect U.S. customers and prevent and detect terrorist financing and money laundering,” McGinley continued.
Case Background
- According to the complaint, KuCoin offered and executed commodity derivatives and leveraged, margined, or financed commodity transactions to and for people in the U.S. from approximately July 2019 to approximately June 2023, and failed to implement required know-your-customer (KYC) compliance procedures. The complaint further alleges that although KuCoin claimed to have implemented KYC procedures, those procedures were a sham and did not prevent U.S. customers from trading commodity interests and derivatives on the platform.
- The complaint also alleges people who identified themselves as being U.S. customers were permitted to trade commodity futures, swaps, and leveraged, margined, or financed commodity transactions on the exchange, in violation of the CEA and CFTC regulations. KuCoin failed to impose any IP address restrictions during the relevant period to prevent U.S. customers from trading commodity interests or account for commonly used technology such as virtual private networks (VPNs) that could potentially circumvent IP address restrictions.
Related Criminal Action
- In a separate criminal matter, the U.S. Attorney’s Office for the Southern District of New York filed an indictment against PhoenixFin PTE Ltd., Flashdot Limited, and Peken Global Limited charging them with violating the Bank Secrecy Act, operating an unlicensed money transmitter business, and conspiracy to violate the Bank Secrecy Act and operate as an unlicensed money transmitter business.
The Division of Enforcement staff responsible for this matter are Christopher Giglio, Andrew Rodgers, Jack Murphy, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382)), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers may be eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
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