PEKEN Global Limited, the Seychelles-based entity operating KuCoin, one of the world's largest cryptocurrency exchanges, has pleaded guilty to charges related to unlicensed money transmission. The announcement was made by Danielle Sassoon, the United States Attorney for the Southern District of New York. Since at least September 2019, KuCoin failed to comply with U.S. anti-money laundering (AML) and know-your-customer (KYC) regulations. These lapses allowed the platform to be used for potentially illicit activities without reporting suspicious transactions or registering with the Financial Crimes Enforcement Network (FinCEN).
As part of a plea agreement, PEKEN will pay penalties exceeding $297 million and cease operations in the U.S. market for at least two years. Additionally, two founders of KuCoin, Chun Gan ("Michael") and Ke Tang ("Eric"), indicted in March 2024 alongside PEKEN, will step down from any managerial roles within KuCoin.
U.S. Attorney Danielle R. Sassoon commented on the case: "For years, KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions. As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds."
Court documents reveal that since its inception in September 2017, KuCoin has grown into a major global cryptocurrency exchange platform with over 30 million customers worldwide and significant daily trading volumes. Between its founding and March 2024, approximately 1.5 million users were based in the U.S., generating about $184.5 million in fees.
KuCoin's platform supports various cryptocurrency trades and derivative products like futures contracts tied to cryptocurrencies such as Bitcoin and Ethereum. Despite operating as a money transmitting business subject to FinCEN registration requirements under the Bank Secrecy Act provisions—mandating AML programs including KYC processes—KuCoin did not enforce these until August 2023 when it introduced mandatory KYC for new users.
Before this implementation, employees publicly stated that KYC was not obligatory on social media platforms even when responding to inquiries from U.S.-based customers seeking clarity on identification requirements.
The failure led to significant misuse of KuCoin’s services for transferring suspicious funds linked with darknet markets and cybercrime activities like malware distribution and fraud schemes.
Alongside admitting guilt for unlicensed operations in America; PEKEN agreed upon forfeiting $184.5 million criminally while incurring an additional fine nearing $112.9 million collectively involving both co-founders who also consented towards relinquishing roughly $2.7 million each obtained through their involvement stateside.
The El Dorado Task Force within Homeland Security Investigations' New York Field Office played a pivotal role during investigations assisted by HSI Pretoria located across South Africa according Ms Sassoon's acknowledgment toward collaborative efforts made throughout proceedings overseen by Assistant U.S Attorneys Emily Deininger & David R Felton representing Illicit Finance & Money Laundering Unit respectively handling prosecution duties accordingly