Legal trouble has fallen on cryptocurrency exchange KuCoin, which has agreed to pay $300 million and agree to leave the U.S. market for two years. On Wednesday, the company admitted to operating an unlicensed money transmitting business in the United States. The U.S. Department of Justice (DOJ) sued for not following proper rules for handling money and identifying customers, according to Quartz, and this settlement comes in its wake.
As part of the deal, KuCoin founders Michael Gan and Eric Tang will step down from their roles in the company. KuCoin must forfeit $184.5 million and pay a $112.9 million civil money penalty to resolve the case. As part of its agreement with the DOJ, the company also must forfeit an additional $2.7 million.
The legal issue kicked off when U.S. officials found KuCoin didn’t comply with Anti Money Laundering (AML) rules and didn’t check the identity of its users at all. So, the platform got used to process suspicious transactions such as fraud, malware and ransomware.
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KuCoin said it will cease service to U.S. customers for now, but will continue to service customers worldwide. In the meantime, it would be working to enhance its security and compliance measures, hiring more team members and getting the required licenses in other countries.
The settlement comes as the U.S. government cracks down on crypto exchanges. The company hopes to come back to the U.S. market at some point in time, when those legal requirements are satisfied. Taking over the helm is BC Wong, the new CEO of KuCoin, who will oversee the company as it tries to further strengthen its operations and follow regulations around the globe.
The case is part of a wider effort by the U.S. government to ensure that cryptocurrency firms do not skirt the law and are being run more responsibly.
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