KuCoin Agrees to $22M Settlement, New York User Ban

A consent order and stipulation lodged with the New York Supreme Court on December 12 state that cryptocurrency exchange KuCoin has agreed to pay the state of New York $22 million and prohibit its residents from using its platform.

KuCoin acknowledges in the order that it “operates a cryptocurrency trading platform where users, including those in New York State, can buy or sell cryptocurrencies that are securities or commodities as defined by New York State law” and “is not registered as a broker-dealer for securities or commodities.”

Stipulation and consent order filed on Dec. 12. Source: Supreme Court of the State of New York

Furthermore, KuCoin “acknowledges that it misrepresented itself as an exchange” and failed to obtain registration as an exchange in accordance with the regulations of New York State.

Within one hundred twenty-two days, KuCoin has consented to terminate the accounts of all New York resident users and to prohibit future account acquisition by New York residents. Additionally, users will have 30 days to make withdrawals, while the remaining 90 days will still be available for withdrawals.

A prioritem of the exchange’s reputation was its lenient stance on privacy, which absolved users of the obligation to adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.

Due to the fact that the exchange exclusively processed cryptocurrency deposits and withdrawals, it was not in need of banking partners who might have mandated such adherence.

Withdrawals from unverified accounts were limited to a minimum of 5 bitcoins, which is equivalent to around $206,000 at the present exchange rate. The exchange provided the option for users with withdrawal amounts below this threshold to engage in cryptocurrency buying or selling activities without disclosing any personal information.

In theory, this would have enabled users from countries where KuCoin lacked a license to open accounts on the exchange, as the exchange would have been unable to verify the identities of these users. This policy was discontinued on June 28, when KuCoin implemented mandatory KYC for all users.

After July 15, it obstructed all deposits from unverified accounts and terminated all services for these users; withdrawals, however, remained operational. The settlement dated December 12 confirmed that some of these users resided in New York.

Daily volume for KuCoin exceeds $1 billion, and the website receives more than 2 million visits per week, according to CoinMarketCap data.