KuCoin Pleads Guilty to Unlicensed Operations, Pays $297M Fine

TLDR

• KuCoin pleaded guilty to operating an unlicensed money transmitting business and will pay $297 million in penalties
• The exchange must exit the U.S. market for at least two years after serving approximately 1.5 million U.S. users
• Founders Chun Gan and Ke Tang will step down and forfeit $2.7 million each
• The platform facilitated billions in suspicious transactions and lacked proper KYC/AML procedures until August 2023
• KuCoin’s KCS token rose 10-13.7% following the settlement announcement

KuCoin, one of the world’s largest cryptocurrency exchanges, has agreed to pay $297 million in penalties after pleading guilty to operating an unlicensed money transmitting business in the United States. The settlement, announced on January 28, 2025, by the U.S. Department of Justice, requires the exchange to cease its U.S. operations for at least two years.

The Seychelles-based company, operated by Peken Global Limited, served approximately 1.5 million registered users in the United States. During this period, KuCoin generated at least $184.5 million in fees from these U.S. users, according to court documents released by the United States Attorney’s Office for the Southern District of New York.

The investigation revealed that KuCoin had failed to implement required anti-money laundering (AML) policies designed to identify criminal actors and prevent illicit transactions. U.S. Attorney Danielle R. Sassoon stated that the exchange was used to facilitate billions of dollars worth of suspicious transactions, including proceeds from darknet markets, malware, ransomware, and fraud schemes.

As part of the settlement terms, KuCoin must forfeit $184.5 million and pay an additional criminal fine of approximately $112.9 million. The exchange’s founders, Chun “Michael” Gan and Ke “Eric” Tang, have agreed to step down from their positions and will each forfeit approximately $2.7 million in funds generated from U.S. operations.

The DOJ’s investigation uncovered that KuCoin employees openly promoted the exchange’s lack of know-your-customer (KYC) requirements. It wasn’t until August 2023 that the platform adopted a KYC process, but even then, it wasn’t implemented for existing customers who could continue to withdraw funds or close positions without meeting the new standards.

The exchange never filed mandatory suspicious activity reports, as required by U.S. financial regulations. This lack of compliance allowed the platform to process billions of dollars in potentially criminal proceeds without proper oversight or reporting to authorities.

In response to the settlement, Gan released a statement through KuCoin stating that he was stepping down to ensure the exchange’s continued success, maintaining that he had no intent to violate any U.S. or international law.

The exchange has appointed BC Wong as its new Chief Executive Officer. Wong has expressed optimism about KuCoin’s future, emphasizing plans to innovate while ensuring regulatory compliance going forward.

Despite the harsh penalties and requirements, KuCoin’s native token, KCS, showed resilience in the market. Following the announcement of the settlement, the token’s value increased by approximately 10-13.7%, according to data from CoinGecko, though trading volumes remain thin.

KuCoin Price on CoinGecko

The broader cryptocurrency market also showed stability during the announcement, with Bitcoin trading near $102,700 and Ethereum maintaining levels around $3,203.62.

The settlement marks one of the largest penalties imposed on a cryptocurrency exchange for operating without proper licensing in the United States. The two-year ban from U.S. operations will begin immediately, and the exchange must implement strict measures to prevent U.S. users from accessing its services.

The agreement stipulates that neither Gan nor Tang can be involved in the exchange’s operations during the two-year period. This leadership change represents a complete restructuring of KuCoin’s top management as it works to rebuild its reputation and compliance framework.

The DOJ’s action against KuCoin follows a pattern of increased enforcement in the cryptocurrency sector. The settlement terms require the exchange to maintain comprehensive compliance programs and submit to regular audits of its operations.

KuCoin must also implement enhanced screening procedures for all users and maintain strict documentation of all transactions. These measures aim to prevent future use of the platform for illicit activities.

The exchange has begun the process of notifying its U.S. users about the impending closure of their accounts and providing instructions for withdrawing their assets before the deadline.

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