Godfrey Benjamin
In an exclusive update teased by Independent crypto Journalist Wu Blockchain, cryptocurrency exchange KuCoin considered putting a stop to its operations and selling the firm in 2023.
KuCoin: Operational Woes and Regulatory Crackdown
Since last year, KuCoin has been faced with several regulatory challenges that threaten its operations as a digital asset trading venue. The crypto exchange and two of its founders; Chun Gan and Ke Tang were recently charged by the United States Department of Justice (DoJ) for flouting multiple federal laws to grow their trading platform into one of the biggest in the nascent industry.
For context, the embattled crypto leaders were accused by the DoJ of operating KuCoin as a money-transmitting business with over 30 million customers but failed to implement a Know-Your-Customer (KYC) or even the Anti-money Laundering (AML) program. When it eventually did in 2023, its KYC program did not take existing customers into cognizance.
Despite the charges, none of the two co-founders has been arrested even after they allegedly conspired to violate the Bank Secrecy Act.
Altogether, it was reported that KuCoin facilitated up to $4 billion in suspicious and criminal funds including “$3.2 million worth of cryptocurrency from Tornado Cash,” a crypto mixer that was sanctioned by the Treasury Department Office of Foreign Assets Control (OFAC).
Apart from the enforcement action from the DOJ, the Commodity Futures Trading Commission (CFTC) also indicted KuCoin on Tuesday. As a company that offers spot and futures trading services, the regulator noted that KuCoin did not register either as a futures commission merchant, swap execution facility, or designated contract market.
All of these enforcement actions which according to Wu Blockchain started in 2023 forced the crypto exchange into considering a business selloff. Top executives in exchanges like Binance allegedly received information about the intended sales.
Exclusive: Three independent sources confirmed to WuBlockchan that KuCoin considered ceasing operations and selling the exchange in 2023. KuCoin was launched into criminal investigation by the U.S. in 2023, and has also been subject to multiple investigations in China. pic.twitter.com/7Fl4aLk6cW
— Wu Blockchain (@WuBlockchain) March 27, 2024
Chinese Authorities on KuCoin’s Tail
It seems the Seychelles-based crypto exchange had faced a similar challenge in China before now considering that in 2021, it asked its mainland Chinese users to transfer their digital assets to “other platforms” before a stipulated final deadline.
KuCoin claims to be compliant with regulations inherent in any jurisdiction it finds itself in, but it looks like this is not the case considering the multiple charges and financial law violations it is facing in many jurisdictions.
“KuCoin has always complied with the laws and regulations of various countries and insisted on operating in compliance,” the exchange said.
Meanwhile, the DOJ’s charges have triggered massive outflows up to the tune of $1.1 billion from the exchange, adding more complication to its woes.
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