KuCoin faces scrutiny over alleged legal threat in stolen funds case

KuCoin is facing new scrutiny after blockchain investigator ZachXBT claimed the exchange sent legal warnings to a victim whose stolen funds were allegedly routed through KuCoin-linked accounts. 

The case involves a reported $250,000 Atomic stealer theft from Aug. 18, 2025, according to ZachXBT’s Telegram post.

ZachXBT listed one theft address and five alleged KuCoin deposit addresses. He claimed the accounts involved “purchased mule KYC,” a term used for accounts verified with another person’s identity. The claims have not been confirmed by court filings or an official KuCoin statement.

The screenshot shared with the post appears to show a message signed by KuCoin Customer Care and Support Team. It says KuCoin respects the right to raise concerns through legal and regulatory channels, but warns that false or unlawful statements may lead to legal claims.

The message also says, “All rights are expressly reserved.” The post drew further attention after DNBWIZARD shared the exchange on X and said, “Hilarious @kucoincom threatening to sue me.”

KuCoin allegations echo earlier compliance concerns

The dispute comes after years of pressure on KuCoin’s compliance record. In January 2025, the U.S. Department of Justice said KuCoin pleaded guilty to operating an unlicensed money transmitting business and agreed to pay more than $297 million in penalties. The DOJ said KuCoin failed to maintain effective AML and KYC programs and allowed suspicious activity on its platform.

The DOJ had charged KuCoin and two founders in March 2024, alleging that the exchange failed to maintain proper anti-money laundering controls. Prosecutors said KuCoin had received more than $5 billion and sent more than $4 billion in suspicious and criminal funds between 2017 and 2024.

Related stolen funds cases remain in focus

As reported by crypto.news, a fake Ledger Live app stole at least $9.5 million from more than 50 victims earlier this year. That report said the stolen funds were routed through more than 150 KuCoin deposit addresses and into a centralized mixing service.

The same report said blockchain investigator ZachXBT traced stolen funds through transactions into KuCoin deposit addresses linked to AudiA6. It also noted that recovery would likely require law enforcement action and cooperation from exchanges.

As previously reported by crypto.news, KuCoin secured a MiCA license in Austria through its European subsidiary in late 2025. The approval allowed the exchange to offer regulated services across the European Economic Area under the EU’s passporting rules.

However, Austria’s regulator later barred KuCoin’s European arm from new business and onboarding customers, citing compliance staffing issues. The restriction followed KuCoin’s earlier push to present itself as a regulated European platform.