KuCoin Pleads Guilty to Unlicensed Money Transmission, Agrees to Nearly $300 Million in Penalties

Key Takeaways

• KuCoin’s Guilty Plea: KuCoin’s parent company, Peken Global Limited, pleaded guilty to running an unlicensed money transmitting business, agreeing to pay $297 million in fines and forfeitures.
• Lack of Compliance: KuCoin avoided implementing basic anti-money laundering (AML) policies, including Know Your Customer (KYC) checks, which allowed billions in illicit funds to flow through the platform.
• Consequences for U.S. Operations: KuCoin will exit the U.S. market for at least two years, and its founders have agreed to step away from the company entirely.
• A Major Blow to KuCoin and Crypto Industry: While KuCoin remains operational globally, losing access to the U.S. market is a significant setback. The case signals that U.S. regulators are tightening the reins on crypto firms ignoring compliance.
• The End of Regulatory Arbitrage: The case underscores that crypto firms can no longer bypass U.S. regulations by operating offshore. The trend of lax crypto compliance is facing increased scrutiny and enforcement.

Full Article

For years, KuCoin marketed itself as the “People’s Exchange,” a go-to platform for crypto traders worldwide. But behind the sleek interface and global appeal, U.S. authorities say KuCoin was playing fast and loose with the law—allowing billions in potentially illicit funds to flow through its platform with little to no oversight. Now, that game is up.

On Monday, KuCoin’s parent company, Seychelles-based Peken Global Limited, pleaded guilty to running an unlicensed money transmitting business. The exchange will cough up $297 million in fines and forfeitures, and it won’t be doing business in the U.S. for at least two years. Meanwhile, its founders, Chun Gan (aka "Michael") and Ke Tang (aka "Eric"), who were indicted last March, have agreed to step away from the company altogether.

“KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions,” said U.S. Attorney Danielle Sassoon. “As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds.”

Translation? KuCoin made itself the Wild West of crypto, and now it’s paying the price.

A Crypto Playground With No Rules

Let’s get one thing straight, KuCoin wasn’t some obscure back-alley operation. It was one of the biggest cryptocurrency exchanges in the world, serving over 30 million users and raking in billions in daily trading volume. But despite its size, it ran without the basic compliance guardrails that financial institutions—crypto or otherwise—are legally required to have.

For years, KuCoin didn’t bother verifying users' identities. If you wanted to trade Bitcoin, Ethereum, or a host of other cryptocurrencies, you didn’t need to provide so much as an email linked to your real name. Until July 2023, the exchange simply didn’t require Know Your Customer (KYC) checks at all. Even after KuCoin finally imposed KYC rules, they only applied to new users—meaning existing customers could continue moving funds with no questions asked.

And it wasn’t just a passive oversight. KuCoin actively marketed itself as KYC-optional, with employees responding to concerned customers on social media, reassuring them that, yes, they could trade without verification—even if they were based in the U.S.

What could possibly go wrong?

According to the Justice Department, quite a lot. KuCoin’s lax policies enabled criminals to launder money through the platform, with illicit proceeds from darknet markets, malware, ransomware, and fraud schemes washing through the exchange. And while U.S. law requires money-transmitting businesses to register with the Financial Crimes Enforcement Network (FinCEN) and report suspicious activity, KuCoin never bothered to do either.

It’s not that they didn’t know better. It’s that they didn’t care.

The Bill Comes Due

Now, after nearly six years of ignoring U.S. regulations, KuCoin is paying up—big time.

As part of its guilty plea, KuCoin will:

• Forfeit $184.5 million in illicit gains
• Pay a $112.9 million criminal fine
• Exit the U.S. market for at least two years

Meanwhile, founders Gan and Tang are walking away from the company entirely, and the Justice Department has deferred prosecution against them for two years. That means as long as they keep their noses clean, they won’t face additional charges—at least for now.

But make no mistake: this is a watershed moment for crypto regulation. KuCoin isn’t the first exchange to be hammered by the U.S. government—Binance’s $4.3 billion settlement last year was an even bigger headline—but it reinforces a clear trend: U.S. regulators are done playing nice with crypto firms that skirt compliance.

What’s Next for KuCoin & the Crypto Industry?

KuCoin’s future is uncertain. While the company will still operate globally, losing access to the lucrative U.S. market—where it made at least $184.5 million in fees from American customers—will be a major blow. The company will likely have to overhaul its entire compliance structure if it ever hopes to re-enter the U.S. legally.

For the broader crypto industry, the message is loud and clear: regulatory arbitrage—setting up shop offshore and pretending U.S. laws don’t apply—is no longer a viable strategy. Regulators are closing in, and the days of “catch me if you can” are over.

Will KuCoin rise from the ashes? Maybe. But for now, one of the biggest names in crypto has been knocked down a peg, and the industry is watching closely.

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