Crypto platform KuCoin has been hit with a $19.6-million penalty by federal anti-money laundering authority, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
The Seychelles-based firm that operates the KuCoin platform, Peken Global Ltd., is being sanctioned for three alleged violations of anti-money laundering rules. These include failing to report 33 suspicious transactions — such as transactions with illegal dark web markets, involving suspected criminals and companies that distribute chemicals used to produce illegal, synthetic drugs.
For instance, FINTRAC said that it identified transactions in crypto wallets “with direct or indirect exposure to known suspicious sources, including darknet marketplaces, mixing/tumbling services, questionable gambling sites, illegal activities (e.g., ransomware), and/or theft reports.”
The agency classified these alleged violations as “very serious”, alongside lesser allegations that the platform failed to register as a foreign money services business with FINTRAC, and failed to report a large transactions (worth over $10,000).
The agency said that, using blockchain analytics, it identified almost 3,000 transactions worth over $10,000 that the platform executed between June 2021 and May 2024.
The company is appealing the penalty to the federal court, the agency noted.
In a statement, KuCoin said that it “strongly disagrees with both the findings and the penalty” imposed by FINTRAC.
It argues that it shouldn’t be classified as a foreign money services business, and said that it “considers the fine to be excessive and punitive.”
“We disagree with this decision on both substantive and procedural grounds, and we have pursued all available legal avenues to ensure a fair outcome for KuCoin,” said BC Wong, CEO of KuCoin. “As always, we remain fully committed to transparent operations and compliance with all applicable laws.”
In 2022, Ontario’s Capital Markets Tribunal sanctioned a couple of other Seychelles-based companies — Mek Global Ltd. and PhoenixFin Pte Ltd. — for breaching securities rules by trading securities without registration and illegally distributing securities.
The firms, which didn’t participate in the regulatory enforcement proceedings, were fined $2 million and permanently banned by the tribunal. Those sanctions have not been paid, according to the Ontario Securities Commission’s (OSC) list of unpaid sanctions.
This story has been updated with a statement from KuCoin.