KuCoin Goyah Crypto Exchange, Founder Charged With Violating The Bank's Privacy Law

The founder of the KuCoin crypto exchange has been charged with law. (Photo; Doc. AssetMarketNews)

JAKARTA - In the important development of the crypto industry, US Attorney for the Southern District of New York, Damian Williams, together with Darren McCormack, Special Official for Domestic Security Investigation (HSI), has announced the opening of the charges against KuCoin, major global cryptocurrency exchange, and its two founders Chun Gan and Ke Tang.

The indictment includes allegations of conspiring to operate a money transfer business without a license and violating the Secret Bank Act. Reported by CryptoNews, KuCoin, through its entities Flashdot Limited, Piken Global Limited, and Phoenixfin Private Limited, have been aggressively seeking business from US customers, while deliberately avoiding regulatory obligations.

The exchange, which has more than 30 million subscribers globally, has ignored the basic anti-money laundering (AML) policy, which allows it to become the center of illegal financial activity.

KuCoin founder faces a maximum sentence of five years in prison. Entities operating as KuCoin were also charged with multiple offenses, including operating a money forwarding business without a license and violating the Bank Secrets Act, potentially leading to substantial prison sentences.

US prosecutor Damian Williams stressed that KuCoin deliberately hides its US customer base while taking advantage of significant trading volume. He warned other cryptocurrency exchanges to comply with US law if they intend to serve American customers.

KuCoin's appeal to AML and know-your-customer (KYC) procedures facilitates the laundering of billions of proceeds of crime. Despite having a large user base, KuCoin's loose policy allows anonymity, attracting customers who wish to avoid KYC requirements.

The accusations against KuCoin founders emphasize the importance of regulatory compliance in the cryptocurrency industry, sending a clear message to other exchanges operating in the United States. In a broader context, KuCoin recently reached an important milestone in the Indian market as the first global crypto exchange to comply with the country's FIU.

However, in South Korea, KuCoin and 15 other international crypto exchanges have received the spotlight of financial regulators for failing to comply with local guidelines and allegedly wooing domestic clients without operational permits. Thus, this development shows that regulation and compliance are becoming increasingly important in the global cryptocurrency industry.