The crypto exchange KuCoin is witnessing a substantial drop in assets after facing legal challenges from the Department of Justice (DOJ).<\/p>\n\n\n\n
Recent data from Kaiko, a firm specializing in blockchain analytics, reveals that KuCoin’s share of the daily trading volume has halved following accusations by the U.S. DOJ and Commodity Futures Trading Commission (CFTC).<\/p>\n\n\n\n
KuCoin Sees Trading Volume Decline<\/p>\n\n\n\n
The announcement of legal charges triggered a significant number of users to initiate withdrawals from KuCoin, causing delays in the process. In an attempt to manage the situation, KuCoin launched an airdrop campaign worth $8.95 million. Despite these measures, the platform’s market share plummeted from 6.5% to 3%, as Kaiko’s figures show.<\/p>\n\n\n\n
Prior to facing legal scrutiny, KuCoin boasted a daily trading volume of $2 billion, which fell by about 75% to $520 million subsequent to the charges. The holdings of Bitcoin and Ethereum by KuCoin users in March also saw a sharp decline, with Bitcoin reserves dropping 25.4% to 12,114 BTC and Ethereum by 22% to roughly 112,000 ETH. Additionally, the amount of Tether (USDT) held by users decreased by approximately 22% to 693 million.<\/p>\n\n\n\n
DeFiLlama’s statistics also highlight a significant outflow, with more than $843 million in digital assets withdrawn from KuCoin in just the last week. On-chain data suggests that users are moving their assets to competitors like Coinbase, Binance, and OKX, or opting for self-custodial wallets, with some of the outflow likely due to market makers exiting the platform.<\/p>\n\n\n\n
Despite these withdrawals, KuCoin’s proof-of-reserves report shows that its assets are fully collateralized, with token collateralization ratios between 109% to 115%.<\/p>\n\n\n\n
Legal Troubles for KuCoin<\/p>\n\n\n\n
The DOJ recently levied charges against KuCoin and its co-founders, Chun Gan and Ke Tang, for breaches of anti-money laundering regulations.<\/p>\n\n\n\n
The DOJ alleges the exchange enabled laundering of over $9 billion and deliberately avoided U.S. anti-money laundering (AML) and know-your-customer (KYC) protocols by falsely declaring it had no customers from the U.S.<\/p>\n\n\n\n
One notable point from the DOJ’s case is that, between August 2022 and November 2023, 197 deposit addresses associated with KuCoin received roughly $3.2 million in cryptocurrencies from the sanctioned virtual currency mixer Tornado Cash.<\/p>\n\n\n\n
Concurrently, the CFTC has initiated a civil lawsuit against KuCoin for unlawfully operating a digital asset derivatives trading platform. The CFTC’s legal challenge seeks various penalties, including disgorgement, permanent bans on trading and registration, civil monetary penalties, and a permanent injunction against future violations by the exchange.<\/p>","protected":false},"excerpt":{"rendered":"
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