Kucoin settles with United States Attorney's Office - Penalties of nearly US$ 300 Million for Unlicensed Money Transmission

Saldys Jusu-Sheriff, Managing Partner, ARMC

Kucoin is a Seychelles-based company that operates by some estimates the world's largest crypto exchange. Bigger than Binance; Coinbase; and even Crypto.com.

According to the U.S. Attorney's Office, Southern District of New York, Kucoin which was charged back in mid 2024 with violating U.S. anti-money laundering laws by failing to vet customers, allowing billions of dollars in illicit funds to be transferred since its founding in 2017, has agreed to settle the case and pay penalties of around $297 million.

In a statement issued by the US authorities:

U.S. Attorney Danielle R. Sassoon said: “For years, KuCoin avoided implementing required anti-money laundering policies designed to identify criminal actors and prevent illicit transactions. As a result, KuCoin was used to facilitate billions of dollars’ worth of suspicious transactions and to transmit potentially criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes.? Today’s guilty plea and penalties show the cost of refusing to follow these laws and allowing unlawful activity to continue.”

For those who follow the Crypto scene, this fine is nowhere near the multi-billion dollar settlement that Binance reached with the US authorities. What is interesting and similar is that the founders of Kucoin are now both under US deferred prosecution agreements for 2 years; and additionally, both have agreed to forfeit approximately $2.7 million in funds received as a result of Kucoin’s operations in the U.S. Our understanding is that they have both agreed to step away from the running of the business.

So what does this mean for African financial institutions many of whom are itching to dip their toes in the cool blue crypto pool, or even looking at how they can acquire these super crypto exchanges as clients? Its really quite simple - Firstly, do your regulations permit you to get involved? If so, then do your KYB (Know Your Business) and Enhanced Due Diligence (EDD). For crypto-related clients, take the EDD up a few notches. Check the prospects global regulatory approval status. If their primary license was issued by the VFSC or some other Offshore jurisdiction, then maybe you think a little harder about onboarding.

And for those investors looking to launch exchanges perhaps to service North-South funds corridors now migrating from Fiat to crypto, make sure you have a solid AML / CFT framework in place. If you haven't got the funding to deliver high-quality AML/CFT compliance, then really your investment is at risk.

Interest and adoption of crypto is growing super-fast across Africa. Nigeria is the largest market at the moment; but having sounded out sentiments in many other countries there is keen interest. The attraction is obvious, right?

In our next article we will share the sentiments of African regulators towards crypto. Will we see a plethora of central bank digital currency (CBDC) issuances especially as President Trump has fired up the US crypto scene? Stay tuned.