KEY POINTS
From the moment KuCoin launched in late 2017, federal prosecutors claimed the cryptocurrency exchange deliberately neglected to create a robust system to prevent misuse for illegal purposes, including funding terrorism.
The Manhattan federal prosecutors highlighted on Tuesday that KuCoin lacked adequate measures to confirm the identities of its customers or to report dubious transactions.
Suspicious Transactions Worth $5 Billion
Damian Williams, the U.S. Attorney, criticized the exchange for not instituting fundamental anti-money laundering safeguards, thus turning KuCoin into a refuge for covert financial dealings. Williams pointed out that the exchange handled over $5 billion in transactions deemed suspicious or criminal.
On the same day, the Commodity Futures Trading Commission, responsible for regulating the derivatives market, initiated legal proceedings against KuCoin.
This development triggered a massive withdrawal of funds from KuCoin, with the platform experiencing a withdrawal of $278 million in stablecoins, marking the largest single-day outflow since the FTX collapse in November 2022, as per CryptoQuant’s data.
KuCoin’s Response to the Allegations
KuCoin responded to these allegations by assuring that the platform is fully operational and user assets are secure. The company acknowledged the reports and mentioned that they are seeking clarity on the matter through legal counsel. KuCoin emphasized its commitment to adhering to international laws and compliance standards.
Prosecutors accused KuCoin of deliberately hiding the fact that a significant number of American clients were using the platform, thereby falsely claiming exemption from U.S. regulations. Williams conveyed a stern warning to other cryptocurrency exchanges, stating that serving U.S. customers obligates them to comply with U.S. laws.
