The U.S. Southern District of New York's top prosecutor, Damian Williams, and HSI New York's temporary head, Darren McCormack, have announced charges against KuCoin and its founders, Chun Gan and Ke Tang.

The allegations revolve around illicit money transfers and breaking the Bank Secrecy Act by failing to implement measures to prevent money laundering and terrorist financing, not properly verifying client identities, and neglecting to report suspicious activities.

KuCoin sought to attract more U.S. customers to establish itself as a leading cryptocurrency exchange, resulting in questionable transactions exceeding $9 billion.

Established in September 2017, KuCoin actively targeted American clients to expand its trading services and amassed a global user base exceeding 30 million.

By bypassing legal requirements such as registering with U.S. regulatory bodies like FinCEN and following anti-money laundering (AML) protocols and customer verification procedures, KuCoin neglected their legal duties.

Gan and Tang are accused of violating the Bank Secrecy Act and operating an unauthorized money transmission business, each carrying a potential prison sentence of up to five years. KuCoin and related entities also face similar charges, potentially resulting in fines spanning five to 10 years.

Recently, KuCoin agreed to cease operations in New York as part of a settlement over a lawsuit involving unauthorized securities and commodity sales. The settlement mandates KuCoin to pay over $22 million, with $16.7 million earmarked for refunds to New York customers and an additional $5.3 million to the NYAG.