Kucoin has been charged with violations of the Commodity Exchange Act by the US CTFC.
Takeaway Points
- Kucoin has been charged with violations of the Commodity Exchange Act by the US CTFC.
- CTFC charged Kucoin for illegally dealing in off-exchange commodity futures transactions and accepting orders for commodity futures, swaps, etc. without registering with them as a futures commission merchant.
- The U.S. Attorney’s Office for the Southern District of New York filed an indictment against PhoenixFin PTE Ltd. Flashdot Limited, and Peken Global Limited charged them with violating the Bank Secrecy Act.
What is Kucoin charged with?
The cryptocurrency exchange Kucoin, in a press release on Tuesday, was charged with multiple violations of the Commodity Exchange Act (CEA) and CTFC regulations by the Commodity Futures Trading Commission.
Based on the report, CTFC charged Kucoin for illegally dealing in off-exchange commodity futures transactions and accepted orders for commodity futures, swaps , leveraged, margained, or financed retail commodity transactions without registering with them as a futures commission merchant (FCM).
Ian McGinley, the Director of Enforcement, said that for some time now, some crypto exchanges have been using a similar playbook by offering derivative products and claiming that those in the United States cannot use it while in reality they can.
“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 U.S. with commonly used technology can trade without providing basic customer identifying information,” McGinley said.
“As made clear by the CFTC’s action today and its previous enforcement actions, the CFTC’s playbook should also now be familiar – the CFTC will charge such entities with failing to register with the CFTC and failing to comply with the agency’s rules that protect U.S. customers and prevent and detect terrorist financing and money laundering,” McGinley further added.
Details of the case
As stated in the report, the complaint also alleges people who identified themselves as being U.S. customers were permitted to trade commodity futures, swaps, and leveraged, margined, or financed commodity transactions on the exchange, in violation of the CEA and CFTC regulations. KuCoin failed to impose any IP address restrictions during the relevant period to prevent U.S. customers from trading commodity interests or account for commonly used technology such as virtual private networks (VPNs) that could potentially circumvent IP address restrictions.
Other Charges
According to the report, in a different criminal matter, the U.S. Attorney’s Office for the Southern District of New York filed an indictment against PhoenixFin PTE Ltd. Flashdot Limited, and Peken Global Limited charged them with violating the Bank Secrecy Act, by operating an unlicensed money transmitter business.
Christopher Giglio, Andrew Rodgers, Jack Murphy, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan are the Division of Enforcement staff that is in charge of the case.
The CFTC urges the public to confirm a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.
About Kucoin
Kucoin is one of the largest cryptocurrency exchanges that was launched in 2017. its headquarters in the Seychelles. It has more than 30 million users in over 200 countries. It offers over 850 cryptocurrencies for users to buy, sell, and trade, and Johnny Lyu is the CEO.
