Massive Outflows: Over $1 Billion Leaves KuCoin
Crypto exchange KuCoin has been hit hard in the last 24 hours, with over $1 billion flowing out of the platform after the US Department of Justice (DoJ) announced charges against the exchange and its founders, Chun Gan and Ke Tang. The charges stem from allegations of violating anti-money laundering (AML) laws.
https://x.com/0xScopescan/status/1772825350957105588?s=20
Unregistered and Unregulated: KuCoin Faces AML Violations
According to the indictment, KuCoin operated as a money-transmitting business without registering with any US government entities. Shockingly, the exchange lacked both KYC (know-your-customer) and AML programs until 2023, despite serving over 30 million customers.
Scopescan, an on-chain analytics firm, reported the staggering outflow of funds from KuCoin. The exchange’s reserves plummeted from $4.8 billion to $3.821 billion, with significant withdrawals in USDT, Ethereum, and Bitcoin. Notably, several crypto whales also joined the exodus following the DoJ’s announcement.
Mounting Pressure: Closure or Sale on the Horizon?
Facing mounting regulatory pressures, KuCoin had reportedly contemplated closure or sale of the exchange, with rumors of potential acquisition circulating among competitors like Binance.
Crypto Regulation Heats Up: CFTC Classifies ETH as a Commodity
In a related development, the US Commodity Futures Trading Commission (CFTC) classified major digital assets, including Ethereum (ETH), as commodities. This move, part of the CFTC’s complaint against KuCoin, sheds light on the ongoing SEC investigation into the Ethereum Foundation. The SEC aims to potentially classify Ether (ETH) as a security.
KuCoin’s Fall: A Lesson in AML Compliance and Evolving Crypto Regulations
The CFTC’s action against KuCoin seeks various penalties, including disgorgement, monetary fines, and permanent trading bans, emphasizing the seriousness of regulatory compliance in the crypto space.
KuCoin’s plight underscores the importance of adhering to AML regulations and highlights the evolving regulatory landscape for cryptocurrency exchanges worldwide.
