ZachXBT revives criticism of KuCoin over allegations of legal threat to $250K scam victim

Blockchain investigator ZachXBT has published evidence that KuCoin sent a legal warning to the victim of a crypto theft. 

The user lost $250,000 in an Atomic Stealer theft, and the funds were allegedly routed through the exchange. ZachXBT previously accused KuCoin of being complicit in crypto crimes. 

Why is KuCoin sending legal threats to victims?

ZachXBT posted on Telegram back in August of 2025 that a user lost $250,000 in an Atomic wallet theft. The stolen funds were allegedly sent to five KuCoin deposit addresses that used “purchased mule KYC.” These are identity documents bought from third parties to pass verification checks. 

Crypto community member DNBWIZARD wrote on X that KuCoin was threatening to sue them. A screenshot showing a message from the KuCoin customer care team warning that “false or unlawful statements” could lead to legal claims was attached to the post.

In May 2026, ZachXBT wrote on X that the exchange “does not assist victims or law enforcement” and called the team “complicit.” He alleged that the exchange allows illicit funds to flow as long as they generate fees. 

Prior to that, in April 2026, he asked the exchange to explain how over $9.5 million from a fake Ledger app was laundered through more than 150 KuCoin deposit addresses in one week. He also pointed out another $3.5 million from the Bitcoin Depot incident that was routed through at least 25 KuCoin accounts. 

KuCoin has had a rough history with regulators 

In March 2024, the U.S. Department of Justice charged KuCoin and founders Chun Gan and Ke Tang with Bank Secrecy Act violations and operating an unlicensed money transmitting business. 

Prosecutors alleged the exchange received more than $5 billion in suspicious funds between 2017 and 2024 while hiding that about 17% of its users were based in the United States. 

KuCoin pleaded guilty in January 2025 and agreed to pay more than $297 million in penalties. Another condition was that the exchange would exit the U.S. market for at least two years. The DOJ said KuCoin failed to implement effective anti-money laundering and know-your-customer (KYC) programs. 

In March 2026, the CFTC issued a separate consent order requiring KuCoin to pay a $500,000 civil penalty. The order permanently bans KuCoin from allowing U.S. users on its platform unless it registers as a foreign board of trade. 

How is KuCoin doing in Europe?

In Europe, KuCoin secured a Markets in Crypto Assets (MiCA) license in Austria through its subsidiary in November 2025. But Austria’s financial regulator, the FMA, banned KuCoin EU from onboarding new customers in February 2026 after the firm lost its key anti-money laundering and sanctions compliance officers. 

The ban was lifted when the key roles were filled again, but the exchange still cannot start full operations because it hasn’t met all supervisory requirements, including governance rules and filling other key functions in senior management. 

In a separate case, a Seychelles court ruled in a delisting dispute that KuCoin could not treat unwithdrawn tokens as abandoned. The Swiss investor involved in the case was awarded $2 million by the court. So far, KuCoin has yet to pay.