News 
January 28, 2025 
3 min. 
In an unprecedented move toward the regulation of cryptocurrency, major crypto exchange KuCoin has admitted to running an unregistered money-transmitting business within the United States jurisdiction, coming to terms with a $300 million settlement with the federal authorities.
The settlement has sparked enormous amounts of controversy in the financial industry as this includes a $184.5 million forfeiture and a $112.9 million fine. This also happens to be one of the largest penalties ever created in a crypto exchange and hints toward stricter controls that will be imposed upon the cryptocurrency industry.
As part of the settlement, the terms require KuCoin to exit the United States market for two years under the restrictions imposed on them. In tandem, co-founders Michael Gan and Eric Tang would be required to step down from management positions. The company in conjunction will have to pay $2.7 million under a settlement agreement with the Department of Justice (DOJ).
KuCoin Regulatory Violations and Settlement Impact
As per the Department of Justice investigation, there have been serious shortcomings in KuCoin’s regulatory compliance policies with respect to Bank Secrecy Act (BSA) and Anti-money Laundering (AML) compliance and KYC procedures. The exchange was operating without mandatory user identification rules until mid-2023, actively advertising to the public that KYC protocols were voluntary. Alongside that, the firm also defaulted on the registration with the US treasury department’s financial crime enforcement network – something that is very fundamental. This was a major lapse on the company’s part.
In spite of the settlement legitimately being harsh, Kucoin’s co-founder Michael Gan was pleased with said settlement as he noted on January 28. The DOJ has consented to withdraw all prosecution of Gan and Tang so long as certain stipulations of the agreement are carried out. The exchange is withdrawing from the U.S. market, but still continues to have a global presence and has pledged to improve its security and compliance measures.
As seen from BitMEX’s settlement of $100 million for AML violations, this settlement is part of the ever increasing lawsuits against cryptocurrency firms. This case highlights the evolution of the crypto regulatory landscape and points in the direction of increased scrutiny and regulation of foreign exchanges which access the U.S. markets.
