Topic: Two Kucoin Founders accused of violating anti-laundering laws etc. (Read 301 times)

This is only in the beginning stages of the case heheeh. We are presently witnessing what was being argued last year in the forum. This argument was if the American government can force CZ to retire as CEO of Binance and can also force him to pay billions in settlement, it might also do it against any exchange that are offering their services in America. Political connections will be important to have for these exchanges.

Now that DeFi is more widespread, maybe it is highly recommended.

It is the same speculation that the case of Kucoin is almost similar to Binance but the pressure of Kucoin will not be so big because the owner only violates what has been stated by the US government.
Until now I have not seen how much the fine will be imposed on the founder of Kucoin maybe this is still a stage process where the US government will announce it soon.

I very much agree! Use DeFi if you want to trade or swap cryptocoins and tokens.

On the question if Kucoin will collapse or not, I speculate that it might occur very much similar to Binance where they are forced by regulators in each jurisdiction to cooperate. Also if their founders will become targets of the American government, they might also be forced to pay a large settlement fee hehehe. However, this is not like a similar case to CZ and Binance. CZ has only become a target because he was the trigger on FTX's collapse. Kucoin might pay only a small fee heheheeh.

This is actually an indication of not using centralised exchanges. Because that's how exchanges anytime would collapse. They have to deal with different kinds of funds, so accusing an exchange for money laundering is pretty easy. However, though Kucoin said funds are safe and do not impact exchanges, there is still risk. I have actually withdrawn all the funds from Kucoin. I'm not going to use any big funds on Kucoin anymore until they fix everything normal. 

Kucoin is a good choice and an ideal alternative to small platforms because it has reached a size that can be trusted to a certain extent, and I think it has proven its integrity in the way it deals with the crisis. But let us not forget that the charges against the platform are serious and cannot be explained solely in relation with the restrictions imposed by the United States on crypto companies since the fall of FTX. The fact that Kucoin can get out of it with reduced penalties does not eliminate the charge, and this in itself cannot be counted in favor of the platform’s reputation. This means that a platform that has been accused of complicity in money laundering operations cannot be completely trusted, even if it is honest with its users, because there is a possibility that its assets will be confiscated or that a heavy penalty will be imposed on it, leading to problems or a defect in management.

It is best for Kucoin or Binance to comply with the laws so as not to expose themselves and their users to many risks, and let us not forget that the platforms can push towards destroying their competitors, as happened with FTX and Binance, which put a nail in the coffin of FTX by selling FTX assets below their value and thereby helped in the collapse of their price.

Every exchange handles their issues differently but it looks like kucoin will easily get away with this. But if we're going to analyze these issues being thrown to exchanges, it's likely that most of them have their dark secrets.

I agree and if we're going to take a look at the timing they're doing it, it's been done before the bull run or when the market has already been up. So, that little thing that we can connect through it could really be in favor of these agencies that are pushing the sues to exchanges like kucoin and they might not be the last one.

In all fairness, there are reasons for KuCoin to be indicted. There were indeed legal lapses committed by KuCoin. They will have to face that. Whether this is harassment, whether this is simply an anti-crypto move, the point is that KuCoin knowingly and, therefore, willingly committed errors along the way.

I believe government agencies are selective in filing cases. They're not doing their jobs with integrity. Hell, they could even be used by rich and powerful companies like BlackRock to weed out competition. But what can we do? KuCoin failed to register with FinCEN. It failed to register with CFTC. It failed to comply with AML policies. This goes on. They will have to answer for all these failures.

Sure... Because I made a withdrawal without having to go through the KYC process, so until now MEXC exchange is not KYC required.

Kucoin poured $10 million for airdrop for yesterday's case, probably to hire lawyers more than that because it is competent and sturdy while Kucoin's market evaluation is now $3,221b according to DefiLlma sources.

Yes... they may survive to hire a solid lawyer to defend the founder.

I feel that things are fine now as there are no more complaints in sight, but the court proceedings will continue. My assumption is that Kucoin may still survive.

Wait, what?  I could have sworn MEXC went KYC a while ago--are you sure about that statement?

That's an assumption atop an assumption--first, that Kucoin would be considered a "big" exchange and second, that they actually do have some kind of competent legal team that can....defend against money laundering charges.  Yeah, good luck with that!  Even if they could put up a solid defense, they'd be fighting the US government and I'm guessing the cost of that defense would be enough to put them out of business anyway.

Man oh man, how things go from A-OK to disaster within days.  I'll be keeping an eye on this situation, although I'm 80% sure how it's going to turn out.

Compensation for Withdrawal Congestion and Gratitude for Loyalty Users

Initially, the bulk of the amount, worth $8.95 million, will be distributed to users whose withdrawals were disrupted during the period extending between March 26, 22:00 PM and March 28, 00:00 AM. The amount allocated to each user will range from $5 to $200, depending on how long the withdrawal is delayed, which can be considered very generous.

It was also announced in the same article that AirDrop will also include users who had assets on their accounts in the same period from March 26 to 28 and had not withdrawn them. The details of this second part of the Airdrop will be announced a week after the article is published, that is, five days after today’s date.

Kucoin statedd in the same article that Airdrop distribution is subject to legal arrangements, and therefore each user has his own situation according to the laws in his country:

So if you are right there is a real risk of bank run, because if currently all customers assets are not available because of loans or investments, there could be a crash. People would sell all their funds against cryptos in order to be able to quickly withdraw them or they would sell against fiat money. And since Kucoin is a big exchange with a big volume it could affect all the market, in almost the same way as what happened with FTX.

Exchanges will not tell their customers when they are about to crash exchanges will definitely try to defend with the tweets they make on platform X. Like a few days ago when there was a withdrawal delay of more than two hours Kucoin said it was no problem, but what happened Kucoin compensated the affected withdrawals.

Exchanges will definitely defend what they can not to be seen to fall, exchanges will make opinions to keep their customers.
It is not recommended to stay on the exchange for long, it will definitely refer to it.

It's not surprising to see so many people withdrawing their assets from the exchange because those news are very concerning actually. When exchanges fall down they rarely make warnings before, gently asking people to transfer their funds to another platform or to their wallets for their safety, they usually close their doors with all the assets remaining from their customers instead, unfortunately.

News says that a billion dollars were withdrawn within 24 hours from the platform, and usage declined by 20%. The platform explained that the delay in withdrawals was due to the large number of withdrawal requests, and that operations are continuing and have not stopped. It can be said that Kucoin succeeded in overcoming the effects of the news of the accusations against her, hoping that she would not face harsh penalties or that more evidence implicating her would be revealed. Fortunately for Kucoin, this news coincided with a new ATH rise period for Bitcoin, so there was no noticeable impact on the entire market, and events gradually calmed down.

In all the news articles, it is mentioned that the charges against the platform’s administrators may lead to long prison sentences, but nothing is mentioned about the possibility of a scenario similar to what happened with Binance, that is, the possibility of imposing alternative penalties such as financial fines and imposing specific activity policies for the platform, including censorship and, of course, confirmation. Preventing the platform from reaching American users.

According to what I understood from the Airdrop news, the distribution will be for those whose withdrawals were delayed during the three-day date.
In response to a comment on Twitter, Johnny_KuCoin confirmed that the rewards will include all those who remain loyal to the platform.
I found in one of the articles that airdrop may not happen without problems:

That thing got me thinking for a second but it's about being charged under the Bank Secrecy Act.
I was surprised for a moment, did they not just ignore KYC but somehow also magically sold customer data they didn't have in the first place?

But yeah, who didn't see this coming, everyone was restricting no KYC accounts or imposing them but Kucoin was bragging about their high limits with no id check, the only surprise is that it took them so long.


Binance deja-vu!

None of these exchange developers can evade legal consequences for money laundering. However, when they're pursued by the law, it often seems they're primarily after their cut of the profits, leading to settlements behind closed doors. Kucoin isn't a newcomer in the exchange scene, and I have confidence in their ability to manage such situations effectively

This is the test for kucoin to see how reliable they are and if they can surpass this legal challenges happen to them recently then maybe we can say that they are good exchange.  But since for now they are facing serious issues then I guess its better to stop using them for a while so that no problem will occur on our side and can make sure that we are safe away from those possible issues that might happen after these problems happen to their platform.

Before we see binance got issue and now kucoin which leaves an impression to me that government is somehow creating issues that can possible make them collapsed since they want this to happen and replaced it with other platform that they can control.

Big exchanges usually have a very strong legal team that are prepared for issues like this, so it will take a very big case to really crash an exchange. As someone using an exchange, there is always an uncertainty, it is due to this uncertainty still that we advise to never keep an amount of money you cannot afford to loose on any exchange.

My first thought upon reading this was "Is there absolutely no honesty in the crypto space?".  And that isn't the first or even the 10th time that's run through my mind.  If Kucoin gets caught up in a big enough scandal, then my guess would be that yeah, they're done for.  They might have been, or even still be, a popular exchange but we've seen enough shenanigans take down exchanges before, and enough government scrutiny on crypto as of late, that they probably wouldn't be able to survive a massive hit to their reputation.


Did they even have to do that?  They're not based out of the US if I'm right, so I don't know which regulatory agency could put enough pressure on them such that they'd make a move that'd be sure to lose them a significant number of customers.  Ah well.

TBH, kucoin has been lax with US users, so I'm not surprised US has come for their ass.

1. There was no geo-blocking for a good amount of time -- it probably came late.
2. Countless reddit posts of kucoin mods subtly encouraging US residents because KYC was not mandatory.

e.g.

That's how it is... I look at it now but don't know about the future. Lol

FTX case is worse, Kucoin next? I don't think it's happening anytime soon, but luckily I don't have a balance there.

It's funny that for this accusation case the CEO of Kucoin held an airdrop of $10,000,000 to the community in the form of KCS and BTC this will be given to those who withdraw for a long time at that time, hmm like they are fishing or inviting the community to come back?

[1] https://www.kucoin.com/blog/letter-from-kucoin-ceo-10-million-airdrop-in-kcs-btc-in-thanks-to-community-support
[2] https://twitter.com/kucoincom/status/1773039000846237944

No, but they have a digital derivative assets license and the companies are Mek Global Limited, PhoenixFin PTE Ltd., Flashdot Limited, and Peken Global Limited, which puts them under the jurisdiction of the CFTC regulations, which has brought legal charges against them https://www.cftc.gov/PressRoom/PressReleases/8884-24


Such lawsuits could end in settlements that result in huge sums being paid to the CFTC, penalties for both Chun Gan and Ke Tang, and a ban on providing service to anyone in the United States.

Kucoin will be fine if the settlement amount is acceptable and the CFTC does not find additional evidence.

I do not think KuCoin can collapse so easily after these accusations from the DOJ and CFTC. This matter can be settled since Kucoin is considered one of the top exchanges in the market, so they have sufficient reserves of funds to move forward and process users’ withdrawals. They announced that they had appointed lawyers to address the alleged charges, and I know that the platform has faced and resolved many previous problems. Binance was the closest example; despite the rumors that spread at the time that Binance would end after its war with the SEC, it has now been regulated and continues its operations uninterrupted.

It is worth noting that I saw one of the articles that indicated a net outflow of nearly $2 billion of funds from Kucoin after massive withdrawal operations from exchange clients due to the spread of FUD ^[1]. Additionally, amidst the ongoing bad news, the Kucoin platform is preparing an airdrop worth $10 million in KCS and BTC rewards for its clients ^[2]. Perhaps this indicates they want to calm the situation and make users stop withdrawing their assets from the platform.

KuCoin operating safely?

Come on man, I'm not trying to be biased here but don't you remember what happened to FTX?

"Funds are SAFU" and then they went under. Actually they could've maintained that aura right up until their insolvency if their idiot founder did not start rambling about it on Twitter.

Like that, this does not affect Kucoin globally but the problem may be that US customers who committed criminal acts before KYC was implemented before then the prosecutor's office prosecuted all of this to the founder.

Yes, many are panicking after this news incident, more FUD news about immediately withdrawing funds from Kucoin before it's too late but I still believe Kucoin will continue to operate safely.

If it is better to withdraw immediately and keep it in a personal wallet it will be safer than on the exchange.

As far as I remember they didn't serve US users even before implementing mandatory KYC on users. However, the object of this accusation is especially before KYC was implemented, where US users were still potentially free to register and did business under the withdrawal limits permitted by level 0 users.

It’s just like binance with maybe subsidiary office in US but the headquarter is actually in Mahe, Seychelles. So with this issue definitely their ban will be just placed in US and not affect the entire global exchange. Yesterday many people panicked and started withdrawing their funds but an official statement on X accounts stated that the funds were safe and no need to panic but any one using it might be an idiot (sorry to use that word) not to panic and withdraw there funds

Since it is from the time when they are not doing the KYC, it may be settled easier. I imagine that it's something that they have expected. I see KuCoin as one of the exchanges that could stay longer and be one of the top exchanges still. I know that they have been handling this kind of stuff very well. It's better to be safe than sorry if you are a user of KuCoin. Better transfer your portfolio there or something.

Umm they have literally been charged with unlicensed money transmitting which the USA takes very seriously, so at the very least they are going to be kicked out of the USA if they haven't been already, but it's far more likely that criminal proceedings are opened against them just like they did to BurtW not very long ago.

Binance also faced this problem and is now operating bigger than before.
The Binance platform was facing similar accusations last November 2023, which ended with the imposition of a fine exceeding four billion dollars (the largest fine ever paid in Control) and its owner being puishedd by resigning from the position of CEO and not participating in management for three years, paying a fine of fifty million dollars, and submitting reports for thirty years. The charges are similar. The Kucoin platform has a huge number of assets for a large number of users, and the authorities will not take steps that harm the interests of users, as one of the accusations is that the platform hides a large number of American users, was the reason for it becoming a huge company in the crypto market.

At the present time, it does not seem that there is a state of panic in the market based on the price movement, but there are definitely influential effects. You should also withdraw any assets from the platforme and follow the latest of this news carefully before continuing use. Binance platform also announced the news without mentioning any position.

Hopefully so, but Kucoin trusts the legal process.

If I'm not mistaken since July 2023 Kucoin has implemented KYC for all its users, because of the pressure for regulation.
The only exchange I use that is not KYC is still MEXC.
With Binance it is more than enough because I also have the same documents on Binance if you don't do this then you can't trade.

I don't know if Kucoin Global is based in the US? If this is a separate offense then it will be almost the same as Binance, we know every exchange must have a special one for US citizens, then this action will refer to it, but until now it is said that Kucoin is still fine.

The arrest of two founders and indictment of money laundering is a separate event and may not lead to harm to Kucoin’s investments, but accusing the platform itself of supporting money laundering may lead to its collapse.

The Ministry of Justice statement is as follows:


While it seems that the charges are related to non-compliance with the Know Your Customer (KYC) program or the anti-money laundering program until the year 2023, and even after its implementation, there was no seriousness in this, so I expect that if cooperation with the regulatory authorities is done and all KYC and exchange data provided, a judicial settlement may be reached.

If Binance survived it, I believe Kucoin is not that small not to survive it. But I do not care about surviving it or not, the best that I can tell people to do is to move their money out of Kucoin and trade on another exchange until the matter has been solved. But I believe this can not collapse Kucoin from the result of my analyses.

I was expecting the same thing with CZ where they would resign and be replaced by someone else, but I guess it would be a different scenario.

I saw some people complaining about delayed withdrawals from this X account stating the withdrawal process was delayed by 30 although I don't know if this worked or not.

But there have been a lot of large withdrawals like that, this should be watched out for before a worse crash happens...
There are some people think Kucoin is still safe we don't know in the future this will be a panic.

https://twitter.com/0x_Lens/status/1772669650003796272

Impossible to know... Kucoin has been decent but I lost interest in their platform the moment they decided to enforce KYC on everybody. I know that every centralized exchange does it now but since Binance already has my documents, I don't want to do KYC with every exchange I have an account on.

I withdrew all my coins from binance few weeks ago too and I am quite relieved about it. I was hearing stories about people getting selectively scammed by binance and It was making me nervous. I saw people getting their accounts locked out of nowhere and these people already did KYC on binance. That's some scary shit.

Better be safe than sorry. Don't keep any meaningful coins on any exchange. I hear some pretty bad shit about a decentralized wallet/exchange too. I guess the only time you'd want to use an exchange is when you are cashing out to FIAT.

Deposit > Convert to FIAT > Withdraw all

Everything else should stay in your cold wallet.

I remember that last year, Binance also had serious issues with the US government, for which they pleaded guilty for floating anti-money laundering laws too. but yet it did not lead to the collapse of the exchange, and that's why I think that their current issues with Kucoin will not also be their downfall unless they fail to comply with the government.

I want to believe that by now, every crypto enthusiast is aware of how unsafe it is to store their assets on a centralized exchange. The past incidents of failed exchanges and hack cases are enough to learn from. Despitethe fact that Kucoin may not still collapse in this case, customers need to play smart. Just my opinion, though. 

Kucoin handled their past issues very well, hopefully they will handle this one wisely too.

The latest news from the Kucoin exchange is that founders Chun Gan and Ke Tang have been accused by the US Attorney's Office of violating anti-money laundering and bank secrecy laws.

I read in the Coindesk article that Kucoin also received $3.2 million from Tornado Cash, as well as suspected criminal fund activity from various nefarious groups.


With concerns now, will the Kucoin exchange collapse?
In a statement on X kucoin they said the platform continues to operate properly and even user assets remain safe, but I'm not sure as this would be a concern for its customers.

Source:
[1] https://www.coindesk.com/business/2024/03/26/crypto-exchange-kucoin-violated-anti-money-laundering-laws-us-charges/
[2] https://www.justice.gov/usao-sdny/pr/prominent-global-cryptocurrency-exchange-kucoin-and-two-its-founders-criminally
[3] https://twitter.com/kucoincom/status/1772649807972315170