Elite Law Firm Joins KuCoin in Defense Against DOJ and CFTC Allegations

The crypto exchange has been actively communicating with these regulatory bodies to address the issues.

KuCoin CEO Johnny Lyu is hopeful about these engagements, reportedly pointing out the crypto exchange's efforts to enhance security and compliance.

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In March, the CFTC accused KuCoin of illegal commodity transactions, claiming the platform engaged in off-exchange futures and leveraged retail commodity transactions without proper registration. The CFTC further claimed that by enabling the trading of Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), KuCoin fell under the regulatory scope of the CFTC.

The CFTC is seeking penalties, including disgorgement, civil fines, and permanent trading and registration bans.

Director of Enforcement Ian McGinley commented:

For too long, some offshore crypto exchanges have followed a now-familiar playbook by offering derivative products and falsely claiming people in the United States cannot use their platforms, when in reality, anyone in the US with commonly used technology can trade without providing basic customer identifying information.

Following this, the DOJ filed charges against KuCoin and two co-founders for alleged violations of the Bank Secrecy Act. The DOJ contends that the crypto exchange failed to enforce anti-money laundering (AML) policies, leading to the transmission of over $4 billion in illegal funds.

Additionally, they claim KuCoin's inadequate Know Your Customer (KYC) procedures from July 2019 to June 2023 allowed clients to trade without verification. Despite introducing a KYC system in 2018, KuCoin made it non-compulsory, which prosecutors argue contributed to its growth.

Nonetheless, Lyu believes that with A&O Shearman's assistance, they can achieve a resolution beneficial for all stakeholders.

The decentralized exchange Uniswap is also facing legal challenges from US authorities. Recently, Uniswap formally responded to a Wells notice from the Securities and Exchange Commission (SEC), disputing allegations that it functions as an unregistered securities exchange.