KuCoin Pleads Guilty to Unlicensed Operations in U.S., Agrees to $300 Million Settlement and Leadership Changes

KuCoin has officially pleaded guilty to charges in the U.S. They admitted to running an unlicensed money-transmitting business and agreed to pay nearly $300 million.

This settlement also means the founders of KuCoin will have to step down from their roles at the exchange.

Operating under the name PEKEN Global Limited, KuCoin made this plea in a Manhattan federal court. The Department of Justice announced the details. The agreement includes a forfeiture of $184.5 million and a fine of $112.9 million. Additionally, KuCoin will exit the U.S. market for two years.

Founders Michael Gan and Eric Tang will forfeit $2.7 million and can no longer hold any management positions at KuCoin as part of a deferred prosecution agreement.

In March, prosecutors accused KuCoin, Gan, and Tang of not having effective Anti-Money Laundering (AML) and Know Your Customer (KYC) programs. The Justice Department pointed out that until around July last year, KuCoin didn't require customers to provide any identifying information.

They noted that KuCoin employees publicly stated on social media that KYC was not mandatory. This was even in response to inquiries from U.S. customers. The exchange also faced accusations for failing to register with the Financial Crimes Enforcement Network of the U.S. Department of Treasury.

On January 28, KuCoin posted a blog stating that operations in other markets remain unaffected. They also mentioned making significant improvements in their compliance framework and platform security.

Gan described the settlement as “a favorable outcome.” He also announced that BC Wong, the chief legal officer, would take over as CEO. Gan added that the Justice Department dropped all charges against him and Tang after certain conditions were met. He believes this resolution provides clarity and a clear path forward for KuCoin.

Earlier this month, BitMEX, a rival exchange, was ordered to pay $100 million and received two years of unsupervised probation for not complying with U.S. AML laws.

As of October, U.S. regulators reported collecting over $19 billion in lawsuit settlements from crypto companies. This amount represents nearly two-thirds of all settlements to date.