KUCOIN MARKET SHARE HALVES FOLLOWING DOJ AND CFTC CHARGES 

The crypto exchange KuCoin is witnessing a substantial drop in assets after facing legal challenges from the Department of Justice (DOJ).

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).

KuCoin Sees Trading Volume Decline

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.

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.

DeFiLlama’s statistics also highlight a significant outflow, with more than $843 million in digital assets withdrawn from KuCoin in just the last week.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.

Despite these withdrawals, KuCoin’s proof-of-reserves report shows that its assets are fully collateralized, with token collateralization ratios between 109% to 115%.

Legal Troubles for KuCoin

The DOJ recently levied charges against KuCoin and its co-founders, Chun Gan and Ke Tang, for breaches of anti-money laundering regulations.

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.

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.

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.

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