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While KuCoin faces investigation in the U.S. and mass withdrawals, its officials try to calm down the users.
KuCoin is under intense scrutiny from the U.S. authorities following bank secrecy charges against the exchange and anti-money laundering (AML) act violation by its founders.
This has caused panic among users and has led to massive withdrawals from the platform, including from some high-net-worth traders and investors known as whales.
🔥 I stand with $NAKA
🔥 @NakamotoGamesSo many pm's about what happened to $NAKA, literally nothing happened just a @kucoincom fud that in my opinion will be sorted by Kucoin, cuz Binance had similar problem and they survived, so why wouldn't #Kucoin one of the biggest… pic.twitter.com/32Zc5lxLWx
— 𝐂𝐑𝐘𝐏𝐓𝐎 𝐀𝐋𝐔𝐂𝐀𝐑𝐃 🆃🅷🆁🅴🅰🅳🅾🆁 (@SebastianWols17) March 27, 2024
Analyst Sees No Major Liquidity Risks Despite Withdrawals
Data shared by Nansen revealed a total net outflow of $882 million within the last 24 hours. Similar on-chain data from Lookonchain showed significant movements from crypto whales on the exchange.
One whale with the address “0x1abc” withdrew a massive 54 million USDT from KuCoin over the past 9 hours, transferring those funds to rival exchange OKX.
Another whale labeled “0x5212” moved 32 million USDT from KuCoin to the Bybit exchange less than an hour after the news of the indictment surfaced. These large withdrawals from major clients signal heightened fears over KuCoin’s regulatory issues.
Due to the negative news of #KuCoin, whales are transferring assets from #KuCoin to other exchanges.
Whale"0x1abc" withdrew 54M $USDT from #KuCoin and transferred it to #OKX in the past 9 hours.
Whale"0x5212" withdrew 32M $USDT from #KuCoin and transferred it to #Bybit 50 mins… pic.twitter.com/7A74OrdtE7
— Lookonchain (@lookonchain) March 27, 2024
Despite these outflows, CryptoQuant CEO Ki Young Ju believes there are no major red flags surrounding KuCoin’s reserves that should cause excessive alarm.
He argued that the recent outflows won’t affect the exchange’s reserves. Ju also drew a comparison with bankrupt exchange FTX, highlighting a trend to underscore his point that KuCoin hasn’t commingled its funds with its users, a primary issue with Sam Bankman-Fried’s FTX.
On-chain wise, @kucoincom is fine.$BTC and $ETH withdrawals surged, driven mainly by retail users, with a small impact on the overall reserve.
They appear to not commingle customers' funds and have sufficient reserves to process user withdrawals. pic.twitter.com/p4bJJpwnFJ
— Ki Young Ju (@ki_young_ju) March 27, 2024
KuCoin’s CEO, Johnny Lyu, started to quell market fears and alleviate anxiety. He acknowledged that regulatory gaps are common in emerging industries and emphasized that as the sector evolves, new compliance challenges arise.
KuCoin’s Current Reserves Amid Token Price Decline
According to Lookonchain data, KuCoin’s total portfolio balance is around $6.14 billion across multiple blockchains. This includes 1.36 billion USDT, 14,353 BTC ($1.01 billion), 107,732 ETH ($390 million), 18.57 million KCS ($231 million), and 955,752 SOL ($182 million).
Meanwhile, the news of criminal allegations leveled against KuCoin by the US Department of Justice (DOJ) has caused panic among its users, as some investors have sold their token holdings on the exchange.
One such token mentioned was NAKA, the native token of Nakamoto Games, which saw selling pressure despite a holder making a passionate plea to the community to HODL and not sell due to the FUD, drawing parallels to Binance overcoming past regulatory hurdles.
