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KuCoin Settles with U.S. Authorities for $300 Million Over Compliance Violations

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icon 28/01/25
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KuCoin Settles with U.S. Authorities for $300 Million Over Compliance Violations

KuCoin has admitted to operating without the necessary licenses for a money-transmitting business and has finalized a settlement with U.S. authorities that requires it to pay almost $300 million. This resolution, which took place in a Manhattan federal court, also necessitated the resignation of the exchange’s founders, Michael Gan and Eric Tang.

As part of the settlement, KuCoin is mandated to forfeit $184.5 million and pay an additional fine of $112.9 million. The company will cease its U.S. operations for a period of two years. The founders will also lose $2.7 million and will no longer hold any management role in the exchange as part of a deferred prosecution agreement.

The legal proceedings initiated earlier highlight serious compliance issues, as prosecutors accused KuCoin of having inadequate Anti-Money Laundering (AML) and Know Your Customer (KYC) measures. Reports indicated that, as of mid-2022, the exchange did not insist on customers providing identifying information, even publicly assuring users on social media that KYC procedures were not required. Additionally, KuCoin failed to register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network.

KuCoin expressed on its blog that while its U.S. operations are being placed on hold, business in other regions continues without interruption. The exchange claims to have made significant improvements in compliance and security. Following the settlement, Gan noted that the outcome brings clarity for the company’s future direction and highlighted that all charges against him and Tang were dismissed upon fulfilling specific conditions.

In a broader context, the regulatory landscape for the cryptocurrency market continues to tighten. Recently, another exchange, BitMEX, was ordered to pay $100 million and placed under two years of probation due to similar AML compliance failures. U.S. regulators reported that they have secured over $19 billion in settlements from crypto entities, showcasing the ongoing scrutiny in the sector.

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