U.S. prosecutors and CFTC opened parallel cases against KuCoin

U.S. prosecutors unsealed a criminal indictment against cryptocurrency exchange KuCoin and two founders on March 26, 2024, while the Commodity Futures Trading Commission filed a parallel civil enforcement action against four companies operating the platform. Together, the cases put an offshore exchange’s U.S. customer access, identity checks and derivatives business under simultaneous criminal and commodities-law scrutiny.

The Southern District of New York charged founders Chun Gan and Ke Tang with conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money-transmitting business. Three KuCoin entities were charged with those conspiracies as well as substantive Bank Secrecy Act and unlicensed money-transmission offenses. Gan and Tang remained at large on March 26.

These were accusations, not findings of guilt. The Justice Department expressly said the defendants were presumed innocent unless and until proven guilty.

What prosecutors alleged

The indictment alleged that KuCoin solicited and served U.S. customers without registering as a money-transmitting business with the Treasury Department’s Financial Crimes Enforcement Network. It further alleged that customers could register with only an email address before July 15, 2023, and that KuCoin failed to maintain an adequate anti-money-laundering program, reasonable customer-identification procedures or required suspicious-activity reporting.

The government attributed more than 30 million customers and billions of dollars in daily cryptocurrency trading volume to KuCoin. More consequentially for the criminal theory, the indictment alleged that the platform had received more than $5.39 billion and sent more than $4.09 billion in “suspicious and criminal proceeds” from its September 2017 launch through the period described in the filing. Those amounts were prosecutorial allegations combining activity the government characterized as suspicious or criminal; they were not adjudicated losses, audited customer balances or a measure of funds seized on March 26.

The indictment identified four counts. The two founders faced the two conspiracy counts, while the charged corporate entities also faced the two substantive offenses. No conviction, sentence or forfeiture order followed merely from unsealing the indictment.

The CFTC opened a second front

In case 1:24-cv-02255, filed in the same federal district on March 26, the CFTC alleged that Mek Global Limited, PhoenixFin PTE Ltd., Flashdot Limited and Peken Global Limited illegally dealt in off-exchange commodity futures and leveraged, margined or financed retail commodity transactions.

The agency also alleged that KuCoin accepted orders for futures, swaps and related retail commodity transactions without registering as a futures commission merchant; operated a swaps facility without registering as a swap execution facility or designated contract market; failed to supervise covered activity; and lacked an effective customer-identification program.

The CFTC’s stated relevant window for offering commodity derivatives and related transactions to people in the United States was approximately July 2019 through approximately June 2023. The agency sought disgorgement, civil monetary penalties, permanent trading and registration bans, and an injunction. Those were requested remedies, not penalties already imposed.

Why the paired cases mattered

The institutional message extended beyond one venue. The criminal case treated alleged failures in customer identification, transaction monitoring and federal money-transmitter registration as Bank Secrecy Act and Title 18 offenses. The civil case separately treated access to futures, swaps and leveraged retail products as conduct requiring CFTC registration and compliance.

That combination showed how an exchange could face overlapping U.S. exposure: the location of operating companies outside the United States did not, in the agencies’ view, eliminate obligations created by soliciting or serving U.S. users. The filings did not determine the legal status of every asset traded on KuCoin, create a new cryptocurrency statute or prove every allegation.

The platform disputed the immediate risk

KuCoin said in a contemporaneous statement that it was operating normally, that user assets were safe and that its lawyers were investigating the reports. Chief executive Johnny Lyu likewise said the platform was unaffected. Those were company assurances on March 26, not independently verified reserve or solvency findings.

The event-day record therefore ended with two active cases and sharply opposed positions: U.S. authorities alleged sustained evasion of registration and anti-money-laundering duties, while KuCoin said operations and customer assets were unaffected. Later pleas, settlements or case outcomes are outside this March 26, 2024 reconstruction.