In recent days, KuCoin, a prominent cryptocurrency exchange, has faced a significant surge in withdrawal requests following the announcement of criminal charges by US authorities. Various on-chain analytics firms, such as DefiLlama, Nansen, and SpotOnChain, have reported a sharp increase in withdrawals across different categories of traders, including whales, funds, smart money, and market makers. The allegations made by the US authorities on March 26 accused the exchange and its founders of operating without proper legal permissions and violating bank secrecy and anti-money laundering laws.
Massive Withdrawals of Ethereum-Based Tokens
During this period, KuCoin experienced a substantial outflow of Ethereum-based tokens. SpotOnChain reported withdrawals totaling approximately $500 million, which included $274 million USDT, 15,500 ETH (around $55 million), 50 million ONDO tokens (roughly $46 million), and 12 million FET ($34 million), among other assets. Similarly, the 0xscope dashboard indicated total net outflows from the exchange amounting to $520 million. Furthermore, LookonChain identified two whale accounts that collectively transferred $86 million USDT to platforms like OKX and Bybit.
Amidst the surge in withdrawals, many users reported experiencing delays, leading to concerns reminiscent of previous exchange collapses. However, CryptoQuant CEO Ki Young Ju sought to allay these worries by affirming that KuCoin possesses sufficient reserves to process withdrawals without mixing customers’ funds. He emphasized that BTC and ETH withdrawals primarily driven by retail users had a minimal impact on the exchange’s overall reserve.
DefiLlama’s CEX transparency dashboard revealed that KuCoin’s wallets still held assets worth $3.68 billion at the time of reporting, demonstrating the exchange’s substantial liquidity. CEO Johnny Lyu reiterated that the legal challenges faced by the exchange were not unique but rather typical obstacles encountered by emerging industries. He emphasized the necessity for compliance and standardization as the cryptocurrency sector continues to mature. Notably, KuCoin recently became the first global exchange to register in India, showcasing its commitment to local regulations and proactive compliance efforts.
Continued Operation and Legal Investigation
Lyu reassured users that despite the legal issues, KuCoin continues to operate effectively, and the company’s legal team is actively investigating the allegations to address any concerns. He highlighted the importance of regulatory compliance as the industry evolves, expressing optimism for the exchange’s future growth and development. KuCoin’s ability to weather these legal challenges and maintain operational efficiency underscores the resilience and adaptability of the cryptocurrency exchange amid a rapidly evolving regulatory landscape.
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