KuCoin CFTC Settlement Delayed by Trump Administration Shift

A planned settlement between the US Commodity Futures Trading Commission (CFTC) and crypto exchange KuCoin is now facing delays due to a shift in enforcement priorities under the Trump administration. The delay stems from a letter that was filed on April 21 by CFTC attorney John Murphy to District Judge Valerie Caproni, in which he requested more time to secure internal approval for a deal originally negotiated under the Biden administration.

Murphy also referred to acting CFTC Chair Caroline Pham’s recent remarks that the agency's enforcement division will begin deprioritizing actions against crypto companies, and suggested that authorization for the KuCoin settlement is unlikely to be granted soon. KuCoin, operating under Mek Global Limited, was charged by the CFTC in March of 2024 with multiple violations of the Commodity Exchange Act and associated regulations. The Department of Justice also brought charges against KuCoin and two of its founders for violations of Anti-Money Laundering laws, alleging that the exchange facilitated over $5 billion in deposits and transferred more than $4 billion in suspicious and criminal funds. In January, KuCoin reached a $297 million settlement with the DOJ and agreed to withdraw from the US market for at least two years.

While the CFTC and KuCoin reached an agreement in principle in December, details of the deal were never shared. Since then, the negotiations have been complicated by political developments, including a March request from KuCoin for a 14-day stay to align discussions with a new executive order from President Trump that is aimed at reducing enforcement against digital asset companies. That request was denied by the court, which instead called for more regular updates on the negotiation progress. The situation is complicated even more by the lack of a majority vote at the CFTC, which is currently evenly split between two commissioners from each political party. Without a majority, the agency cannot formally dismiss or settle enforcement cases. The appointment of Trump nominee Brian Quintenz as chair could shift the balance, but his confirmation by the Senate is still pending. Both parties have now asked for an additional 60 days or until the Commission issues clear direction on the matter.

Meanwhile, the CFTC's Divisions of Market Oversight issued a request for comment on April 21 to better understand the implications of perpetual contracts in derivatives markets. Acting Chair Pham acknowledged that technological innovation is transforming financial markets, creating both new opportunities and potential risks for broader market participation.

In other legal news, a group of investors filed a class-action lawsuit against decentralized exchange Meteora. The investors allege that it manipulated the launch and market pricing of the M3M3 token. The amended complaint was submitted on April 21 in the US District Court for the Southern District of New York, and accuses Meteora, venture capital firm Kelsier Labs, and four current or former executives of intentionally misrepresenting key details surrounding the December 2024 launch of the token. Investors claim they lost at least $69 million between December and February, and argued that the token’s value was inflated through deceptive practices and that the public was misled into believing trusted people from the Solana ecosystem were involved.

According to the complaint, insiders created the illusion of a transparent and accessible launch while secretly manipulating sales to inflate M3M3’s post-launch price. The lawsuit also alleges that this spike in value reinforced the defendants' misleading claims that the token had intrinsic value and posed low risk. Investors say the token was marketed as a reliable investment option, with the launch being promoted as fair and public. This led them to rely on its market price as a genuine indicator of value.

Despite a broader trend of regulatory easing under the Trump administration’s acting SEC chair, the agency stated that it fully intends to target fraudulent token launches. The M3M3 lawsuit now only adds to the growing list of legal actions in the crypto space, many of which revolve around securities law violations and deceptive marketing practices.

The plaintiffs allege that Meteora and its associates developed the token with the intention of enriching themselves at the public's expense. Meteora was previously associated with the launch of other controversial tokens in the Solana ecosystem, including TRUMP, MELANIA, LIBRA, and HAWK. According to the lawsuit, Meteora planned to portray M3M3 as a legitimate and trustworthy alternative to other meme coins by leveraging the reputation of its co-founder Ben Chow.