• More than  $1.1 billion have been withdrawn from crypto exchange Kucoin in the past hours.
  • The US Department of Justice charges the founders of Kucoin for violating Anti-Money laundering laws.
  • Kucoin assures users of smooth operations regardless of charges as reports of proposed sale of the company surface.

Crypto exchange Kucoin has been experiencing massive withdrawals since the US Department of Justice on Tuesday slapped it with charges of facilitating criminal activities. While the exchange has assured users that there's no cause for alarm, reports are surfacing online that suggest the founders planned to sell the company in 2023.

Kucoin charged by the DOJ

Kucoin, touted as the fourth largest crypto derivatives and fifth largest spot exchange, was charged on Tuesday alongside its founders, Chun Gan and Ke Tang, for "conspiring to operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act," as announced by the US Attorney’s Office.

According to the announcement, Kucoin failed to maintain robust Anti-money laundering (AML) procedures that should have prevented its platform from servicing money launderers and terrorist financiers. As a result, Kucoin didn't adequately verify customers' identity or report suspicious activity, said the Attorney's Office.

Failure to implement basic AML/KYC “allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds," said US Attorney Damian Williams.

This also follows an enforcement action filed on Tuesday by the Commodity and Futures Trading Commission (CFTC) with the US District Court against sub-companies of crypto exchange Kucoin.

The complaint stated that Kucoin “illegally dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions; solicited and accepted orders for commodity futures, swaps, and leveraged, margined, or financed retail commodity transactions without registering with the CFTC as a futures commission merchant (FCM).”

 

Read more: Binance and Huobi among exchanges warned in India for AML and CFT framework oversight

Investors pull out huge holdings from Kucoin 

The charges have sent shock waves through the crypto community as the 30 million customer exchange has seen withdrawals worth about $500 million on the Ethereum (ETH) network, according to data from Spot on Chain.

The top currencies seeing withdrawals include ~274M USDT, ~15.5K ETH (~$55M), ~50M ONDO (~$46M), ~12M FET (~$34M), and ~95.38M GHX (~$21.8M). Data from Oxscope estimates the total net outflow from the exchange at $1.19 billion in the past 24 hours, with about $4.02 billion of assets still under its custody.

Also read: Bitcoin price is stuck beneath $73K as BTC long-term holders ramp up distribution pressure

Some of the top withdrawals were made by funds, smart money, and market makers, according to data from Nansen.

Due to the increased withdrawals, transactions on the network faced unusual delays on several occasions, leading to speculations of possible shutdowns. However, Kucoin has tried to calm fears by posting on X that they are operating well and users' assets are safe.

They further stated, "We are aware of the related reports and are currently investigating the details through our lawyers. KuCoin respects the laws and regulations of various countries and strictly adheres to compliance standards."

With all of these playing out, "three independent sources confirmed...that KuCoin considered ceasing operations and selling the exchange in 2023," according to an X post by Chinese reporter Wu Blockchain.

Kucoin's indictment comes after the FTX failure of November 2022, which saw its former CEO, Sam Bankman Fried, sentenced on March 28 after being convicted on seven felony counts.

Also read: Solana price hits $200 ahead of SBF's sentencing

Changpeng Zhao (CZ) of Binance would also face sentencing on April 30 after pleading guilty to not maintaining effective AML procedures when managing the exchange.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Cardano Price Forecast: ADA's recent breakout could trigger 15% rally

Cardano Price Forecast: ADA's recent breakout could trigger 15% rally

Cardano price rally on Monday suggests that a larger bullish move might be in the works. On-chain data shows a comeback in investor interest and entry of institutional investors.

More Cardano News

Ondo price poised to break ATH of $1.04

Ondo price poised to break ATH of $1.04

Ondo price is slowly testing its major support level at $0.63-$0.61. Aggressive buyers can consider accumulating around the immediate support zone, which extends from $0.83 to $0.80.

More Ondo News

Shiba Inu price flashes buy signal, 25% rally likely Premium

Shiba Inu price flashes buy signal, 25% rally likely

Shiba Inu price has flipped bullish to the tune of the crypto market and breached key hurdles, showing signs of a potential rally. Investors looking to accumulate SHIB have a good opportunity to do so before the meme coin shoots up.

More Shiba Inu News

New York Attorney General reaches $2 billion settlement with Genesis after claims of fraud

New York Attorney General reaches $2 billion settlement with Genesis after claims of fraud

New York Attorney General Letitia James says her office has secured a $2 billion settlement from Genesis. AG Letitia James sued the crypto company in October on account of lying and defrauding investors of over $1 billion.

More Cryptocurrencies News

Bitcoin: Is BTC out of the woods? Premium

Bitcoin: Is BTC out of the woods?

Bitcoin price shows signs of continuing its uptrend, providing a buying opportunity between $64,580 to $63,095. On-chain metrics forecast a bullish outlook for BTC ahead. If BTC clears $70,000, the chances of resuming the uptrend would skyrocket.

Read full analysis

BTC

ETH

XRP