Cryptocurrency exchange KuCoin has seen its market share decline by 50% following legal action by the Department of Justice and the Commodity Futures Trading Commission.
KuCoin users have panicked after charges were filed against the exchange and have been withdrawing their assets from the platform.
KuCoin Experiences Significant Decline
KuCoin has experienced a significant drop in market share and trading volume after the United States Department of Justice and the Commodity Futures Trading Commission pressed charges against the company. Following the announcement, KuCoin users rushed to the platform to withdraw their assets, leading to increased outflows from the platform and significant transaction delays.
According to KuCoin’s latest proof-of-reserve certificate, the exchange’s Bitcoin holdings have registered a decline of 25% to 12,114 BTC, while its Ethereum balance has dropped by 22% to 112,000 ETH. Other cryptocurrency holdings have registered similar declines, with the platform’s USDT holdings falling by 22% to 963 million USDT. Data from DeFiLlama confirmed the decline, showing that over $843 million worth of assets were withdrawn from the platform over the past week. The decline has led to KuCoin’s balance dropping from $4.3 billion on March 26 to $3.2 billion.
Prior to the charges, KuCoin’s daily trading volume stood at $2 billion. However, following the charges, this declined by nearly $75% to $520 million. Kaiko Data suggested KuCoin users may have transferred their assets to rival exchanges such as Coinbase, Binance, and OKX.
“Some of the outflows can also be attributed to market makers leaving the exchange. In addition to transferring funds to other exchanges, some users are sending their funds directly to their on-chain wallets.”
KuCoin Reponds
KuCoin is facing its legal challenges head-on and has reiterated to its users the compliance efforts it has undertaken. According to KuCoin CEO Johnny Lyu, the exchange’s legal battles are not unique, adding that the platform was operating as usual. The platform also unveiled plans for a special $8.9 million airdrop of its native KCS token and Bitcoin to its users. According to Lyu, the airdrop is intended to compensate those users who witnessed delays in withdrawals between March 26 and 28.
“I understand the importance of user trust and satisfaction. To express our gratitude for your loyalty and patience during the withdrawal congestion, we’re launching this airdrop plan as promised.”
The Charges Against KuCoin
The United States Department of Justice has charged KuCoin and two of its founders,
Chun Gan and Ke Tang for violating anti-money laundering laws. According to the DOJ, KuCoin facilitated over $9 billion in laundering and intentionally bypassed US anti-money laundering (AML) and know-your-customer (KYC) regulations by claiming it had no US customers. The DOJ cited an incident between August 2022 and November 2023, when 197 KuCoin deposit addresses received $3.2 million worth of cryptocurrency from currency mixer Tornado Cash. The mixing service has been sanctioned by the United States Treasury.
Meanwhile, the Commodity Futures Trading Commission also accused KuCoin of operating a digital asset derivatives exchange unlawfully. As part of its legal action, the CFTC is seeking disgorgement, permanent trading and registration bans, civil monetary penalties, and a permanent injunction against any future violation by the platform.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Credit: Source link
