KuCoin Hit With $297M Penalty for Bank Secrecy Act Violations, Agrees to Exit U.S. Market

The Seychelles-based owner of cryptocurrency exchange KuCoin has agreed to pay nearly $300 million in penalties and suspend its operations in the U.S. for two years as part of a settlement over its failure to adequately monitor potential criminal activity on its platform.

Peken Global, the company behind KuCoin since 2019, will pay $297 million in penalties after failing to register as a money-transmitting business with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the Department of Justice (DOJ) announced in a press release on Monday.

Between 2017 and 2024, KuCoin neglected to implement effective anti-money laundering (AML) and know-your-customer (KYC) programs, which are designed to prevent illicit financial activity, including funding criminal enterprises and terrorist organizations. The DOJ revealed that the exchange also failed to report billions of dollars’ worth of suspicious transactions to FinCEN. Until 2023, KuCoin did not require any identifying information from its customers. Even after it introduced KYC requirements for new users in 2023, it allegedly failed to enforce the same standards for existing customers.

During this period, KuCoin generated approximately $184.5 million in fees from its 1.5 million U.S.-based customers, the DOJ stated. Compliance with the Bank Secrecy Act (BSA) requires financial institutions, including crypto firms, to implement KYC and AML programs, as well as monitor and report suspicious activity to FinCEN.

As part of the settlement, KuCoin’s penalties consist of the forfeiture of $184.5 million in revenue and an additional $113 million as a criminal fine.

KuCoin’s founders, Chun Gan and Ke Tang, have also been charged and have agreed to step down from any management or operational role within the company. In addition, the DOJ reached a deferred prosecution agreement with the two, which will last for two years. As part of the deal, Gan and Tang will each forfeit $2.7 million.

Although KuCoin has not issued an official response to the charges, a notice on its website confirmed that its services are now “currently unavailable in the U.S.”

Part of a Broader Crypto Crackdown

The action against KuCoin is part of an ongoing regulatory crackdown on cryptocurrency firms that began in 2023. That year, U.S. federal regulators imposed a record $4.3 billion fine on cryptocurrency exchange Binance for “repeated and intentional” violations of the BSA. Other crypto firms, including Bizlato, Paxful, and BitMEX, have also faced federal enforcement actions, while state regulators such as the New York State Department of Financial Services have penalized Gemini, Coinbase, and Robinhood Crypto.

The 2022 collapse of crypto exchange FTX exposed major deficiencies in compliance measures within the crypto sector. While FTX lacked proper AML protocols, its failure extended beyond that, with severe shortcomings in risk management, internal controls, and corporate governance, raising deeper concerns among regulators.

This wave of enforcement highlights a persistent conflict between cryptocurrency firms and U.S. regulators. Many crypto companies claim they are not based in the U.S. and therefore do not have to comply with U.S. financial laws. These firms frequently fail to properly vet customers or monitor transactions for suspicious activity, with some even using the lack of compliance measures as a selling point to attract users.

Regulators, however, have made it clear that any crypto entity serving U.S.-based customers is subject to U.S. laws, including the Bank Secrecy Act.

“For years, KuCoin avoided implementing required [AML] policies designed to identify criminal actors and prevent illicit transactions,” said Danielle Sassoon, U.S. Attorney for the Southern District of New York, in the DOJ’s statement. “As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes.”

Regulatory Uncertainty Under Trump Administration

The regulatory landscape for cryptocurrency could shift under the administration of President Donald Trump, who has advocated for changes that may benefit the industry. The Securities and Exchange Commission (SEC) announced the formation of a Crypto Task Force to develop a comprehensive regulatory framework the day after Trump returned to office.

Even if cryptocurrency firms gain greater legitimacy under new regulatory policies, they will likely still be required to follow compliance standards applied to U.S.-based financial institutions and foreign entities offering banking-like services to American customers. 

By fLEXI tEAM