KuCoin, a prominent cryptocurrency exchange with over $38 million global users, has agreed to pay a hefty fine of nearly $300 million after pleading guilty to U.S. criminal charges, Bloomberg reported Monday.
The exchange’s founders will be stepping down from their roles as part of the plea deal.
The plea deal, reached on January 27 in Manhattan court, includes a $113 million fine and the seizure of nearly $185 million in assets.
Cleaning House
As part of the settlement with the DOJ, Michael Gan and Ke Tang, KuCoin’s founders, will step down from all roles at the company. Gan said that resolution reflected his lack of intent to violate U.S. law and his non-involvement in any illegal activities such as money laundering or fraud.
He also expressed confidence in the current leadership team and their ability to continue leading the company. BC Wong, the company’s top legal executive, will now lead KuCoin as CEO.
The exchange, accused of operating without the proper licenses and failing to stop money laundering, admitted to facilitating over $5 billion in suspicious transactions. These include activities linked to criminal networks like darknet markets.
Last March, prosecutors accused KuCoin and its founders of serious lapses in security. Accusations flew that the exchange had turned a blind eye to crucial security measures.
Not only did KuCoin allegedly fail to implement proper anti-money laundering (AML) checks and “Know Your Customer” (KYC) procedures, but it also operated without the required licenses from the US government. This lax approach, prosecutors argued, allowed billions of dollars in potentially illicit transactions to flow through the platform.
Changes At The Top
It’s not the first time the exchange has found itself in hot water with US prosecutors. KuCoin faced charges in New York in March 2023 for violating the state’s laws regarding the trading of securities and commodities.
Later that year, KuCoin agreed to a settlement that involved paying $22 million in fines and ceasing operations in the state as part of a consent order. This settlement was a response to allegations that KuCoin operated without proper registration and offered unregistered securities through its service.
The legal settlement does not affect KuCoin’s operations in other markets, the exchange said in a new blog post. The team added that they have considerably improved the exchange’s compliance measures and strengthened platform security.
On January 16, BitMEX, the prominent exchange founded by prominent cryptocurrency figure Arthur Hayes, was ordered to pay a $100 million fine and received two years of unsupervised probation for failing to comply with U.S. anti-money laundering (AML) laws.
U.S. District Judge John Koeltl imposed the penalty after BitMEX pleaded guilty to violating the Bank Secrecy Act. The court found that BitMEX had willfully failed to establish and maintain adequate AML and KYC programs, which are essential for preventing money laundering and ensuring compliance with U.S. regulations.
The judge noted that BitMEX had knowingly allowed U.S. customers to access its platform while failing to implement the necessary safeguards required by law. This ruling capped a series of legal challenges for BitMEX, which has faced scrutiny over its operations and compliance practices in the U.S. cryptocurrency market
Growing The Company
The legal resolution comes in the wake of KuCoin’s recent entry into crypto payments arena. Earlier this month, the exchange unveiled KuCoin Pay, a new solution designed to streamline crypto payments for businesses, allowing them to accept payments directly from KuCoin users.
KuCoin Pay isn’t the first player in the crypto payment space. Established names like Binance Pay and Crypto.com Pay have already carved out a niche in this market. The competition is fierce, with each platform vying for dominance by offering similar features.
For KuCoin Pay to succeed, it will need to differentiate itself from the competition, such as addressing potential security concerns or providing features or benefits that other platforms lack.
