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The global cryptocurrency exchange KuCoin and its two founders, Chun Gan and Ke Tang, have been criminally charged by US authorities for violating the Bank Secrecy Act and operating as an unlicensed money transmitter business. The Department of Justice (DoJ) alleges that KuCoin failed to implement any know-your-customer (KYC) or anti-money laundering (AML) controls until 2023, resulting in over $9 billion in suspicious transactions taking place. The lack of controls allowed the exchange to operate in the shadows of the financial markets, becoming a haven for illicit money laundering. The CFTC also charged KuCoin with multiple violations of the Commodity Exchange Act and is seeking to impose fines and trading bans.

US Attorney Damien Williams stated that KuCoin attempted to hide the fact that it was being used by a substantial number of US users. In failing to implement even basic AML policies, the exchange allowed over $5 billion in suspicious funds to be received and over $4 billion in criminal funds to be sent. This legal action by US regulators comes after similar charges were settled against Binance a few months ago, indicating a crackdown on unregulated cryptocurrency exchanges. The CFTC’s inclusion of Ether (ETH) in its lawsuit against KuCoin reinforces its claim to regulatory authority over the digital asset, particularly in light of recent reports of the SEC considering classifying ETH as a security.

Despite the news of potential regulatory changes in the cryptocurrency market, the price of Ether (ETH) has remained relatively steady. Following a brief dip to just above $3,000 last week after reports of the SEC’s investigation into ETH’s security status, the price has since recovered to above $3,500. This recovery is attributed to a broader crypto market rally that has seen Bitcoin surpass $70,000 and BlackRock’s entry into the asset tokenization space. The world’s largest asset manager recently launched its first tokenized money market fund, BUIDL, on the Ethereum platform, signaling growing mainstream interest in digital assets.

It is important to note that investing in cryptocurrencies carries inherent risks and individuals should exercise caution when venturing into this high-risk asset class. This article serves as informational content and should not be construed as investment advice. Potential investors should conduct thorough research and consider consulting with financial advisors before engaging in cryptocurrency trading or investing. As regulatory scrutiny on the cryptocurrency industry intensifies, exchanges like KuCoin face legal challenges and penalties for operating without proper licenses and regulatory compliance. The ongoing legal actions against KuCoin and its founders highlight the importance of adhering to regulatory requirements and implementing robust AML protocols in the cryptocurrency sector to prevent illicit activities and protect investors’ interests.

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