KuCoin says it entered a strategic partnership with A&O Shearman to address the lawsuits filed by the U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).
KuCoin’s Response to Legal Challenges
KuCoin’s CEO, Johnny Lyu, emphasized the company is committed to addressing the lawsuits seriously. Lyu highlighted the ongoing collaboration with regulators and policymakers as its proactive approach toward addressing concerns.
According to him, since the investigation began, KuCoin has engaged in numerous communications with the DOJ and CFTC, backed by the expertise of A&O Shearman.
Although the specifics of the communications remain under wraps due to judicial constraints, Lyu remains optimistic that sincere discussions will lead to a satisfactory resolution for all parties involved. He noted that KuCoin has restructured its organizational framework, upgraded its systems, and significantly invested in security and compliance measures.
Additionally, over the past two years, the company says it also allocated substantial resources to external compliance efforts. All these are geared towards restoring faith with the regulators.
CFTC Complaints Against KuCoin
The Commodity Futures Trading Commission, CFTC complaint alleges that KuCoin conducted illegal off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions. It also claims that the exchange solicited and accepted orders for commodity futures, swaps, and such transactions without registering as a Futures Commission Merchant (FCM).
Other charges against KuCoin include failure to diligently supervise its FCM activities, and operating a facility for trading or processing swaps without registering with the CFTC. The CFTC also indicts KuCoin for failing to implement an effective customer identification program (CIP). The CFTC is big on regulation and recently called for AI oversight in DeFi integration.
Analysts opine that steps by KuCoin which include a reorganization and system upgrades aimed at bolstering security and compliance may help its case. They emphasized that the exchange needs to show commitment to operate within regulatory frameworks while ensuring the safety and integrity of its platform.
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