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KuCoin Bitcoin Reserve Plunges Over 25% After DoJ Charges – Crypto News

Published

2 years ago

April 3, 2024

Dripp

KuCoin, one of the prominent crypto exchanges, witnessed a significant downturn in its Bitcoin (BTC) reserve. The crypto exchange’s BTC reserve plummeted by over 25% in March on a month-on-month basis. This dramatic decline comes in the wake of recent charges filed by the U.S. Department of Justice (DoJ).

KuCoin Bitcoin & Other Crypto Asset Reserves Decline

According to KuCoin’s latest asset reserve certificate released for the month of March, the user’s BTC assets registered at 12,114. This suggests a 25.4% decrease from February’s value of 16,240 BTC. In addition, the exchange’s Ethereum (ETH) assets also saw a substantial decline, standing at 112,763. It reflects a decrease of 21.91% compared to 114,405 ETH in February.

Additionally, the USDT assets, a stablecoin pegged to the US dollar, took a hit and dwindled by 21.5% to 963 million. Furthermore, the USDC reserve, another stablecoin, experienced a sharp decline of 33.62%, dropping to 39.34 million.

Following the consecutive announcements of lawsuits on March 26, Kucoin experienced a significant decline in both trading volume and market share. Daily trading volume plummeted from approximately $2 billion to $520 million, despite KuCoin’s attempt to mitigate the situation through a $10 million airdrop. Concurrently, its market share more than halved, dropping from 6.5% to less than 3%, according to Kaiko data.

Moreover, data by Kaiko also reveals that Kucoin users have been transferring their funds to alternative centralized exchanges like Coinbase, Binance, OKX, MEXC, and Gate.io, which are perceived as safer alternatives. Some of the outflows can also be attributed to market makers departing from the exchange. Additionally, in addition to moving funds to other platforms, some users are directing their assets straight to their on-chain wallets.

On March 26th, outflows from wallets linked to KuCoin exceeded $600 million, surpassing inflows by a considerable margin. Most of the outflows consisted of USDT and Ethereum, reflecting users’ concerns and their desire to secure their assets amidst the exchange’s legal challenges.

Also Read: Bitcoin Algorithmic Tracking of ETF Flows Creates Volatility in Asian Markets

DoJ Charges Against The Exchange

Earlier, KuCoin found itself in hot water last week as it faced allegations from the Department of Justice (DOJ) for breaching anti-money laundering regulations and a lawsuit from the CFTC regarding its Ethereum margin trading activities. Despite its rapid growth earlier this year, KuCoin is now witnessing a substantial exodus of traders from its platform.

The US DoJ filed charges against KuCoin Exchange and two of its co-founders, Chun Gan and Ke Tang. It accused them of violating multiple laws in their efforts to expand their trading platform into one of the largest in the emerging industry. Damian Williams, the United States Attorney for the Southern District of New York, and other key regulators have brought forth charges alleging that Kucoin, Gan, and Tang conspired to operate an unlicensed money-transmitting business and conspired to violate the Bank Secrecy Act.

This development marked the latest legal action taken by the DoJ against a trading platform, following the $4.3 billion settlement with Binance reached in the fourth quarter of 2023. Notably, KuCoin became the first high-profile entity charged by the DoJ this year. The DoJ emphasized that Kucoin facilitated billions of dollars in daily trades and trillions annually.

However, regulators pointed out that the exchange facilitated illicit transactions, contributing to money laundering activities. According to the charges, KuCoin is accused of assisting in facilitating up to $4 billion in suspicious and criminal funds.

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