KuCoin, a significant player in the cryptocurrency sector, has entered a guilty plea for conducting an unlicensed money-transmitting operation in the United States. As part of the settlement with U.S. authorities, the exchange will pay approximately $300 million and withdraw from the U.S. market for two years. This decision comes alongside the resignation of its founders, Michael Gan and Eric Tang.

The agreement, revealed by the Department of Justice (DOJ) on January 27, mandates KuCoin to surrender $184.5 million and to pay another $112.9 million as a penalty.

KuCoin Founders to Forfeit $2.7 Million

Gan and Tang will forfeit $2.7 million and have been instructed to vacate all managerial and operational roles at KuCoin, which is registered as PEKEN Global Limited in a Manhattan federal court.

The legal actions stem from allegations that KuCoin did not establish adequate Anti-Money Laundering (AML) and Know Your Customer (KYC) measures. Prosecutors claimed that until July 2023, the exchange did not compel customers to provide identifying details. The DOJ reported that KuCoin staff publicly indicated that KYC was unnecessary, even for customers based in the U.S.

Moreover, KuCoin has been accused of not registering with the Financial Crimes Enforcement Network (FinCEN), an agency under the U.S. Treasury aimed at fighting financial crimes.

In a recent blog post on January 28, KuCoin reassured its users that operations outside the U.S. would remain unaffected while emphasizing updates while outlining improvements to its compliance protocols and security mechanisms. The company declared that its Chief Legal Officer, BC Wong, now steps into the role of CEO.

“Today marks a significant milestone for KuCoin and the crypto community. I’m proud to share that we’ve reached a settlement with U.S. authorities, providing clarity for our future growth.”
— BC Wong (@BC_KuCoin) January 27, 2025

Michael Gan described the settlement as a favorable outcome, noting it provides much-needed clarity for KuCoin’s future. He expressed that the DOJ dropped all charges against him and Eric Tang upon meeting specific conditions, asserting no intent to defy U.S. law or conduct fraudulent activities.

Regulatory Scrutiny of Crypto Firms Continue

This incident occurs in the context of heightened regulatory oversight across the cryptocurrency landscape. Earlier in January, rival exchange BitMEX faced a penalty of $100 million with two years of unsupervised probation for AML violations.

U.S. regulators indicated they have accrued over $19 billion from crypto companies in lawsuits, nearly two-thirds of all such settlements to date.

The SEC has adopted a firmer position towards crypto firms in 2024, enforcing almost $4.7 billion in actions against them—an increase of 3,018% compared to the previous year. Recently, the SEC gained a partial victory in its legal skirmish against Kraken, when a federal judge in California dismissed a key defense of the exchange.