Cryptocurrency exchange 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. According to ZachXBT's Telegram post, the case involves a reported $250,000 Atomic stealer theft from August 18, 2025, with the investigator listing one theft address and five alleged KuCoin deposit addresses. ZachXBT claimed the accounts involved "purchased mule KYC," a term used for accounts verified with another person's identity, though these claims have not been confirmed by court filings or an official KuCoin statement.
The dispute centers on a screenshot shared by ZachXBT that appears to show a message signed by KuCoin Customer Care and Support Team. As reported by crypto.news, the message states 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 includes the statement "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."
The current dispute comes after years of pressure on KuCoin's compliance record. According to reports from crypto.news, 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 stated 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 the exchange failed to maintain proper anti-money laundering controls and had received more than $5 billion and sent more than $4 billion in suspicious and criminal funds between 2017 and 2024.
As reported by crypto.news, a fake Ledger Live app stole at least $9.5 million from more than 50 victims earlier this year, with the stolen funds routed through more than 150 KuCoin deposit addresses and into a centralized mixing service. The same report noted that blockchain investigator ZachXBT traced stolen funds through transactions into KuCoin deposit addresses linked to AudiA6. Recovery would likely require law enforcement action and cooperation from exchanges, according to the report.
Despite previous compliance challenges, KuCoin secured a MiCA license in Austria through its European subsidiary in late 2025, allowing the exchange to offer regulated services across the European Economic Area under EU passporting rules. However, Austria's regulator later barred KuCoin's European arm from new business and onboarding customers, citing compliance staffing issues, following KuCoin's earlier push to present itself as a regulated European platform.
