KuCoin Bows Out of US After Guilty Plea in Unlicensed Crypto Exchange Case

• KuCoin has pleaded guilty to operating an unlicensed crypto exchange in the U.S., resulting in a $297 million settlement and a two-year exit from the market
• The case highlights the increasing regulatory crackdown on cryptocurrency firms, with KuCoin committing to enhanced compliance efforts globally.

KuCoin, one of the world’s leading cryptocurrency exchanges, has admitted to operating an unlicensed money transmission business in the U.S., resulting in severe legal and financial repercussions. The company’s parent entity, Peken Global Ltd., formally pleaded guilty to these charges in a Manhattan federal court presided over 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. This marks a significant moment in the ongoing regulatory crackdown on cryptocurrency firms operating in violation of U.S. financial laws.

Financial Penalties and Founder Accountability

The settlement requires KuCoin to pay a $112.9 million criminal fine in addition to a forfeiture of $184.5 million. Furthermore, the exchange’s co-founders, Chun Gan and Ke Tang—also known as Michael and Eric—entered into deferred prosecution agreements. Each co-founder must forfeit $2.7 million and permanently relinquish all managerial and operational roles within the company.

According to investigators, KuCoin facilitated billions of dollars in suspicious transactions linked to illicit activities, including fraud, ransomware, and darknet markets. The exchange was also found to have failed in implementing adequate anti-money laundering (AML) and know-your-customer (KYC) measures. It neither registered with the Financial Crimes Enforcement Network (FinCEN) nor reported suspicious activities, as required under U.S. law.

Heightened Regulatory Scrutiny

KuCoin’s legal troubles align with a growing U.S. regulatory focus on cryptocurrency firms. In a separate legal battle, KuCoin agreed to a $22 million settlement with the state of New York. This case, initiated by New York Attorney General Letitia James, accused KuCoin of operating without proper registration and allowing investors to trade cryptocurrencies illegally.

As part of the New York settlement, KuCoin agreed to block local users from its platform and cease dealing in securities and commodities within the state. These developments underscore the increasing regulatory challenges faced by crypto exchanges operating in the U.S.

KuCoin’s Response and Future Outlook

In response to these legal actions, KuCoin has publicly committed to improving its regulatory compliance and operational security. The company has expanded its compliance team, secured licenses in various jurisdictions, and implemented advanced security measures.

KuCoin assured its users that its global services remain fully operational in unaffected markets. The company also expressed its intent to work closely with regulators worldwide to ensure adherence to evolving financial laws.

The case highlights the risks crypto firms face when bypassing regulatory frameworks in major financial markets. As KuCoin exits the U.S., the broader industry is left to grapple with heightened scrutiny and the growing demand for robust compliance measure.