CFTC Settles With KuCoin for $500K Despite AML Allegations

April 9, 2026

CFTC Settles With KuCoin for $500,000 Despite Alleged Anti-Money Laundering Violations

David Aron, William Brannan, Aiden O'Leary, Kale Pasch, Ethan Silver Lowenstein Sandler LLP + Follow Contact LinkedIn Facebook X Send Embed

On March 30, the U.S. District Court for the Southern District of New York entered a consent order against Peken Global Limited, doing business as KuCoin, imposing a civil monetary penalty of $500,000 and permanently enjoining it from permitting U.S. participants to access its cryptocurrency trading platform without registering with the Commodity Futures Trading Commission (CFTC) as a foreign board of trade (FBOT). 1 The $500,000 penalty stands in contrast to $100 million and $1 billion+ civil monetary penalties the CFTC imposed in two prior enforcement actions involving similar alleged anti-money laundering (AML) failures. 2 The CFTC did not seek separate disgorgement from KuCoin, reasoning that it was already required to forfeit $184.5 million in the parallel Department of Justice (DOJ) criminal action (the DOJ Indictment) 3 and that the forfeiture represented 100 percent of the fees that KuCoin earned from U.S. users. 4

What You Need To Know:

• Despite the smaller penalty in relation to headline-grabbing prior penalties, AML violations continue to be a focus for the CFTC. The consent order resolved only a single failure-to-register count, dismissing the charges for AML violations and failure to register as a futures commission merchant, which drove far larger prior penalties. Although KuCoin’s alleged AML violations involved the alleged facilitation of over $5.39 billion in suspicious proceeds and closely mirror those at issue in the prior actions—including allegations of willful AML failures and active concealment of a substantial U.S. customer base—the CFTC’s new Director of Enforcement identified AML violations as a top enforcement priority one day after the consent order was entered.
• Several factors likely account for the smaller penalties vis-a-vis prior noteworthy CFTC AML cases. For instance, in a recent case involving alleged swap valuation fraud, the court rejected the CFTC’s proposed civil monetary penalty, restitution, and disgorgement amounts where the related criminal settlement already involved very large amounts. There may also be an element of the CFTC’s current leadership wanting to clean up the crypto enforcement docket that it inherited from a more “regulation by enforcement”-focused CFTC, 5 much like former Acting Chair Caroline Pham’s “Enforcement Sprint” cleaned up much of the enforcement docket generally, including many cases that had lingered for years. KuCoin’s Alleged Conduct: More Than a Failure To Register

The DOJ Indictment describes conduct well beyond a technical registration failure. Over several years, approximately 1.54 million U.S.-based members traded commodity derivatives on KuCoin, generating roughly $110 million in trading fees. 6

In that indictment, DOJ alleged that KuCoin willfully failed to maintain an adequate AML program and affirmatively concealed its substantial U.S. customer base, which represented approximately 17 percent of its total users, to avoid triggering U.S. regulatory requirements. KuCoin’s avoidance of a Know Your Customer (KYC) policy was described as “integral to its growth and success,” and KuCoin allegedly prevented U.S. customers from identifying themselves as such when opening accounts. As a result, KuCoin allegedly received over $5.39 billion and transmitted over $4.09 billion of suspicious and criminal proceeds, including from sanctioned individuals and geographies, darknet markets, and ransomware schemes.

The disparity between KuCoin’s $500,000 penalty and prior CFTC civil monetary penalties for similar violations—$100 million and over $1 billion, respectively—is significant. Although several factors potentially explain this discrepancy, it represents a shift from the prior approach, in which the CFTC pursued its own AML and other charges with full force notwithstanding parallel criminal proceedings.

Cooperation credit may have contributed. The consent order emphasizes KuCoin’s cooperation and remedial measures, including offboarding U.S. users and implementing KYC protocols. However, this likely accounts for only a small portion of the discrepancy, since cooperation credit typically reduces penalties on the margin, not by orders of magnitude. Even crediting full cooperation, a penalty of $500,000 against $110 million in commodity derivatives fees (or $184.5 million by DOJ’s calculation) is difficult to reconcile with the penalties imposed on similarly situated exchanges previously, absent some other distinguishing factor.

Aversion to knee-jerk attempts to collect large penalties when there is a successful parallel criminal proceeding. Another explanation is that the CFTC may view DOJ’s criminal resolution as having adequately addressed the AML violations and be content to let DOJ take the lead in seeking very large penalties when AML violations are involved, without seeking to pile on with similarly eye-catching penalty amounts.

Judicial limitations on piling on. The CFTC may also simply have recognized that courts will sometimes restrain its tendency to impose massive penalties in its own cases where DOJ has already extracted its ton of flesh. In an unrelated summary judgment issued by a judge in the Southern District of New York (SDNY) that the CFTC announced just three days after announcing the KuCoin Consent Order (also issued by an SDNY judge), the court limited the CFTC’s proposed penalties in several respects. 7

In reducing the size of the CFTC’s proposed civil monetary penalty, the judge stated that

considering Defendant’s . . . existing criminal forfeiture and restitution obligations . . . it is highly unlikely that Defendant could pay the CFTC’s requested $66 million fine . . . on top of the nearly $150 million he has to pay to satisfy the judgment in the Criminal Action. Additionally, “the deterrence value of a civil penalty is marginal” given the punishments already imposed in the Criminal Action. 8

The court reduced the CFTC’s proposed penalty by two thirds, explaining that “[a] higher penalty amount ‘would be excessive and unrealistic.’” 9 In denying the CFTC’s proposed restitution and disgorgement remedies, the court explained that

[d]istrict courts have found restitution or disgorgement in civil enforcement actions to be unnecessary when there is an existing restitution order with the same or broader scope in a related criminal case . . . . Here, the CFTC requests equitable relief in the same amounts as in the Criminal Action’s Forfeiture Order and amendment judgment. The court in the Criminal Action already ordered Defendant to pay $125,969,962.78 in restitution, plus interest . . . . Similarly, Defendant has already entered into a Forfeiture Order, which obligates him to forfeit $22 million . . . . The CFTC requests the Defendant to pay restitution in the amount of $125,969,962.78 and disgorgement in the amount of $22 million, which are identical to the amounts ordered in the Criminal Action . . . . The CFTC has not explained why duplicative restitution and disgorgement are necessary. 10

Bringing bad actors into the fold. Several recent actions from the CFTC, including its stance on prediction markets 11 and its cooperation with the Securities and Exchange Commission to issue an interpretive framework on crypto-assets 12 has signaled to the industry that the CFTC is looking to expand its regulatory reach and encourage firms—especially crypto trading firms that have traditionally avoided regulation in the U.S. due to its hostile regulatory environment—to register with the CFTC. This order only enjoins KuCoin from operating in the U.S. until it has properly registered with the CFTC, and deciding not to pursue parallel fines for AML and sanctions violations may be a way to signal openness to KuCoin’s return to the U.S., provided it goes through the proper channels this time around.

Looking Ahead

The total financial consequences for KuCoin demonstrate a continued willingness by DOJ and the CFTC to seek enforcement where clear violations exist. However, the CFTC’s willingness to resolve its own action for $500,000 and a ban on acting as an FBOT only when the FBOT fails to register as such (which is required by law anyway) signals that where an exchange cooperates and has already been subject to significant criminal penalties, the CFTC may take a far lighter enforcement stance. This approach seems designed to welcome firms to properly register in the U.S., even if they have impermissibly avoided registration in the past.

1 Consent Order for Permanent Injunction, Civil Monetary Penalty and Other Equitable Relief Against Defendant Peken Global Limited p. 27, CFTC v. Mek Global Ltd., No. 24-cv-2255 (S.D.N.Y. Mar. 30, 2026), ECF No. 58 (hereinafter “KuCoin Consent Order”).
2 KuCoin Consent Order p. 29.
3 United States v. Flashdot Limited, et al., No. 24-cr-168 (S.D.N.Y.).
4 KuCoin Consent Order p. 31.
5 See, e.g., Commodity Futures Trading Commission v. Singh, No. 1:23-cv-01684 (S.D.N.Y. Apr. 1, 2026) (Supplemental Consent Order of Final Judgment as to Defendant Nishad Singh).
6 KuCoin Consent Order p. 22. DOJ, drawing on a broader set of products and a wider time horizon, calculated total U.S. trading fees at $184.5 million. (Indictment, United States v. Flashdot Ltd., No. 24-cr-168 (S.D.N.Y. Mar. 26, 2024), ECF No. 1 (hereinafter “KuCoin Indictment”).)
7 CFTC v. James Robert Velissaris, Case 1:22-cv-01347-JGLC (S.D.N.Y. Mar. 30, 2026).
8 Id. at 25 (internal citation omitted).
9 Id. at 25-26 (internal citation omitted).
10 Id. at 26.
11 See CFTC Sues Trio of States to Reaffirm its Exclusive Jurisdiction Over Prediction Markets, CFTC Rel. No. 9206-26 (Apr. 2, 2026), where the CFTC announced it has sued the states of Arizona, Illinois, and Connecticut to enjoin those states’ regulators from claiming regulatory oversight over prediction market exchanges. ****
12 Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Release Nos. 33-11412; 34-105020, File No. S7-2026-09, RIN 3235-AN56 (Mar. 17, 2026).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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