Major crypto exchange KuCoin has agreed to pay $22 million in fines to the State of New York. In addition to the fine, KuCoin will prevent state residents from using its platform to perform cryptocurrency transactions. The KuCoin fine is one of several actions taken by the State of New York to crack down on the crypto sector, especially against illicit activities conducted by digital asset companies.

According to a court order filed on December 12, KuCoin has agreed to restrict New York residents from using its platform within 120 days. Thirty days from the date of the order, KuCoin will restrict all accounts to withdrawals only and then allow the remaining 90 days for users to withdraw all funds. At the end of the 120 days, KuCoin will close all New York residents’ accounts.

The crackdown highlights the state’s stance against cryptocurrency platforms, especially those it considers to be fully compliant with the law. While governments continuously crack down on seemingly shady crypto activities, several crypto firms still believe in promoting crypto privacy and anonymity. For instance, cryptocurrency mixers like Tornado Cash are designed to obscure crypto transactions so that their origins are difficult to trace. Many online gambling sites are dedicated to curating and reviewing online casinos where users can gamble with crypto anonymously (Source: https://insidebitcoins.com/bitcoin-casinos/best-anonymous-casinos). Despite governments’ best efforts, crypto firms continue to promote privacy and anonymity.

KuCoin was known for its privacy policy, which allowed users to create accounts and conduct transactions without complying with Anti-Money Laundering (AML) or Know Your Customer (KYC) regulations. KuCoin could do this because it did not require users to buy crypto using fiat and, therefore, had no need for traditional financial institutions to function as middlemen. Instead, the exchange accepted only crypto withdrawals and deposits. KuCoin did this until June, when it announced that KYC information would be compulsory, and later began to restrict non-verified users until they submitted the required documentation.

New York Attorney General (NYAG) Letitia James sued KuCoin in March for operating as a securities and commodities broker-dealer without registration. The lawsuit also accused KuCoin of wrongfully representing itself as an exchange while not registered. At the time, the Attorney General wrote that her office “is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk.”

The New York Attorney General’s Office has been on a somewhat prolonged crypto crackdown. Last October, the Attorney General sued Genesis Global, its parent company Digital Currency Group (DCG), and Gemini, the crypto company run by the Winklevoss Twins. The suit accused them of fraud worth more than $1 billion.

In February, the NYAG sued crypto exchange CoinEx for running a business in New York without registering. Papers filed in a Manhattan court stated that CoinEx repeatedly and persistently engaged in fraudulent practices. According to James, CoinEx violated the Martin Act, which prohibits misrepresentation or fraud regarding the purchase and sale of commodities and securities.

Earlier in the year, New York and 9 other states received up to $24 million in January, as fines from crypto firm Nexo Inc, also accused of similar infractions.