KuCoin, a major global crypto exchange, has admitted to running an unlicensed money transmission business in the U.S. market, leading to significant legal consequences.
The company’s parent entity, Peken Global Ltd, formally entered a guilty plea in a Manhattan federal court overseen by U.S. District Judge Andrew Carter. As part of the settlement, KuCoin has agreed to exit the U.S. market for at least two years and pay over $297 million in fines and forfeitures.
Financial Penalties and Founder Agreements
The agreement entails a $112.9 million criminal fine alongside a forfeiture of $184.5 million. Additionally, KuCoin co-founders Chun Gan and Ke Tang, also known as Michael and Eric, have consented to separate deferred prosecution agreements.
As part of their settlement, each must forfeit $2.7 million and relinquish all managerial and operational roles within the company.
Authorities allege that the exchange facilitated illicit financial activity, handling billions in suspicious transactions. These transactions reportedly involved illicit funds from fraudulent schemes, malware, ransomware, and darknet markets.
Investigators also found that KuCoin failed to implement sufficient anti-money laundering and know-your-customer controls. The exchange did not register with the Financial Crimes Enforcement Network (FinCEN) or report suspicious activities as required by law.
Heightened Regulatory Scrutiny
KuCoin’s legal troubles are part of a broader regulatory crackdown in the U.S. on cryptocurrency firms.
In a separate case, the company reached a $22 million settlement with the state of New York and agreed to block local users from accessing its platform.
This lawsuit, initiated by the New York Attorney General, accused KuCoin of failing to register while allowing investors to trade crypto. The settlement also prohibits KuCoin from dealing in securities and commodities within the state.
KuCoin’s Response and Compliance Efforts
Following the legal proceedings, KuCoin has emphasized its dedication to strengthening security and regulatory compliance in a blog post. The company noted that it has expanded its compliance team, secured operating licenses in several jurisdictions, and adopted enhanced security protocols.
KuCoin assured that its global services remain operational in markets unaffected by the restrictions. It also reaffirmed its commitment to regulatory collaboration, stating that it continues to engage with authorities to ensure compliance with evolving financial laws.
We’re pleased to announce that KuCoin has reached a settlement with U.S. authorities, a major step forward in our journey. This milestone brings clarity to our future and strengthens our commitment to innovation, compliance, and delivering value to our 38M+ users worldwide.… pic.twitter.com/EVZI1UI4Zc
— KuCoin (@kucoincom) January 27, 2025
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