KuCoin to Pay Nearly $300 Million for Operating an Unlicensed Money Transmitter in the U.S. — WSJ

By Mengqi SunCryptocurrency exchange KuCoin pleaded guilty in Manhattan federal court Monday and agreed to pay nearly $300 million to settle allegations it operated as an unlicensed money-transmitting business in the U.S.As part of the settlement, KuCoin has agreed to exit from the U.S. market for the next two years. The company said its U.S. users can still withdraw their funds but are banned from trading on the platform.Two of its Chinese co-founders, Chun "Michael" Gan and Ke "Eric" Tang, who faced U.S. indictments, admitted to owning part of an unlicensed money-transmitting business and each entered into a two-year deferred-prosecution agreement. They also agreed to forfeit about $2.7 million each and are barred from having any roles at KuCoin.Deferred-prosecution agreements are typically used against corporate defendants and allow them to avoid prosecution if they comply with the terms and requirements in the agreement.Founded in 2017, Seychelles-based KuCoin said Monday that the Justice Department settlement is a milestone for the company, which has appointed its chief legal officer, B.C. Wong, as its new chief executive."We anticipate this resolution will mark a pivotal moment for KuCoin, paving the way for clarity and closure. While the settlement addresses past compliance gaps, it would allow us to move forward with confidence, focusing on compliance and innovation, and building a stronger platform for the future," a spokeswoman for the company said.The company added that it is looking to re-enter the U.S. market with proper licensing in the future and has made compliance remediations over the past year.U.S. prosecutors in the Southern District of New York in Manhattan alleged last March that KuCoin and its two co-founders conspired to operate an unlicensed money-transmitting business and to violate U.S. anti-money-laundering laws by failing to maintain an adequate compliance program. Prosecutors accused KuCoin, which provided spot and derivatives trading to U.S. customers, of lacking know-your-customer processes, failing to file suspicious activity reports and neglecting to register with the Treasury Department's Financial Crimes Enforcement Network and U.S. Commodity Futures Trading Commission as required.Prosecutors attributed an inadequate anti-money-laundering program to KuCoin receiving more than $5 billion and sending more than $4 billion in illicit proceeds between 2017 and 2024.KuCoin and the two individual defendants didn't admit to conspiring to violate the Bank Secrecy Act as part of their settlements.Alexander Wilson, a lawyer at law firm Jones Day representing Gan, said his client still resides in China."We appreciate the Department of Justice's constructive approach in reaching this resolution and recognition that further prosecution of Gan was not warranted," he said. "The agreement to defer the prosecution appropriately reflects Gan's lack of any intention to violate U.S. law or involvement in money laundering, fraud or similar criminal actions, and we look forward to the dismissal of the charges after the deferral period is completed."Attorneys representing Tang didn't immediately respond to a request for comment.Monday's settlements are the latest legal resolutions for KuCoin, which has faced charges from various U.S. regulators and law enforcement over the past few years. The exchange in December 2023 agreed to pay $22 million and to exit from New York state to settle a lawsuit brought by the New York attorney general's office that March.The CFTC last March charged KuCoin for operating as an illegal digital asset derivative exchange. KuCoin said the company is in the process of negotiating with the regulator for a settlement.Write to Mengqi Sun at [email protected]