KuCoin’s Founders Reached $297M Settlement Deal with DOJ
KuCoin paid $297 million to settle US charges of unlicensed money transmission, violating anti-money laundering regulations and failing to register with FinCEN.
On January 28, 2025, the cryptocurrency exchange KuCoin agreed to pay a hefty $297 million in penalties, concluding a protracted legal battle with the U.S. Department of Justice (DOJ).
The settlement resolves charges that KuCoin operated an unlicensed money-transmitting business within the United States, highlighting the increasing scrutiny and regulatory pressure facing the cryptocurrency industry.
DOJ investigation on Kucoin Operations
The DOJ’s investigation revealed a pattern of non-compliance with U.S. financial regulations. KuCoin, operating under the Seychelles-based entity Peken Global Ltd., failed to register with the Financial Crimes Enforcement Network (FinCEN) and neglected to implement a robust anti-money laundering (AML) program.
DOJ noted that the negligence allowed billions of dollars in potentially illicit transactions to flow through the platform, including proceeds from darknet markets, malware, ransomware, and various fraud schemes.
The Court documents, released by the U.S. Attorney’s Office for the Southern District of New York, detailed KuCoin’s facilitation of these transactions, generating at least $184.5 million in fees from its approximately 1.5 million U.S. users.
The charges against KuCoin stemmed from its failure to adhere to key requirements of the Bank Secrecy Act. Specifically, the exchange failed to implement adequate know-your-customer (KYC) protocols and neglected to file mandatory suspicious activity reports (SARs).
Market Reaction to The Settlement
The settlement agreement includes a substantial financial penalty. Peken Global Ltd. pleaded guilty, resulting in a $113 million fine and a forfeiture of $184.5 million.
KuCoin’s co-founders, Chun “Michael” Gan and Ke “Eric” Tang, each agreed to forfeit approximately $2.7 million and signed deferred prosecution agreements. Furthermore, as a condition of the settlement, KuCoin is required to cease its U.S. operations for at least two years.
KuCoin’s native token, KCS, experienced a temporary surge of 15% in value following the announcement, indicating a degree of market resilience, the long-term impact on the exchange’s reputation and market share remains uncertain.
Notably, the DOJ’s investigation uncovered instances where KuCoin employees actively promoted the platform’s lack of KYC requirements, further exacerbating the regulatory violations. In August 2023, we implemented a KYC process. However, we did not apply it retroactively to existing customers, who continued withdrawing funds without meeting the new standards.
