Over the past day, KuCoin, a cryptocurrency exchange, experienced a significant outflow of $780 million across various blockchain networks. This mass movement of funds coincides with the US Department of Justice (DOJ) filing charges against KuCoin and two of its founders, Chun Gan and Ke Tang, for violating anti-money laundering laws.

The DOJ's allegations include claims that KuCoin operated unlawfully within the US and misled investors regarding its operational jurisdictions. Despite the seriousness of the accusations, neither Gan nor Tang has been arrested.

The charges indicate that KuCoin only implemented a Know Your Customer (KYC) program in 2023, which notably excluded existing users. This delay in implementing regulatory safeguards raises concerns about the exchange's commitment to compliance.

According to the DOJ, KuCoin failed to register with the US Financial Crimes Enforcement Network as a money services business, a legal requirement. This failure, combined with the absence of anti-money laundering measures, allegedly allowed KuCoin to be used as a platform for laundering proceeds from various illicit activities.

The indictment accuses KuCoin of being involved with Tornado Cash, a controversial crypto mixer. KuCoin is implicated in receiving over $3.2 million in cryptocurrency through Tornado Cash, linking it to broader criminal investigations.

Following these legal developments, KuCoin experienced a significant financial impact. Analytics firm Nansen reported a net outflow of $783 million from the exchange, indicating a substantial decrease in its financial standing. Despite this, KuCoin still holds considerable cryptocurrency reserves valued at around $5.1 billion, including thousands of Bitcoins and a significant amount of Ether.

In addition to the DOJ's charges, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against KuCoin, alleging that it operated without necessary registrations for futures and swaps trading.

The CFTC also criticized KuCoin for its inadequate KYC program and is seeking penalties, further escalating the legal pressure on the exchange. Homeland Security Investigations have also identified KuCoin as part of an alleged multibillion-dollar criminal conspiracy.