Crypto exchange KuCoin has seen a startling 20% drop in its user-held reserves, according to the most recent proof-of-reserves (PoR) report.
The decline comes amid a wave of user withdrawals and allegations from the US government regarding alleged anti-money laundering violations.
KuCoin’s Regulatory Challenges Spark User Withdrawals
KuCoin’s latest PoR shows that its user-held assets reserve ratio consists of 12,115 Bitcoin (BTC), 112,763 Ethereum (ETH), 963,72 million USDT, and 39,35 million USDC. The current amount reflects a considerable decrease in its holdings of key cryptocurrencies.
Compared with the last report in February, users’ holdings of BTC dropped by 25.4%, ETH fell by 21.91%, and USDT decreased by 21.5%.
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KuCoin’s PoR in March 2024. Source: KuCoin
The decline in reserves follows a surge in withdrawals from the exchange. BeInCrypto reported that KuCoin experienced over $1.2 billion in withdrawals. Outflows totaled 274 million USDT and 15,500 ETH from KuCoin’s Ethereum wallets in a matter of hours.
Many link the withdrawals to the recent indictment from New York’s attorney, accusing KuCoin and its founders of orchestrating a multibillion-dollar criminal conspiracy
Through an official statement, US Attorney Damian Williams alleged that KuCoin operated as an unlicensed money-transmitting business. The attorney also charged the exchange with violating the Bank Secrecy Act by failing to implement adequate anti-money laundering measures.
“KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of US users were trading on KuCoin’s platform. Indeed, KuCoin allegedly took advantage of its sizeable US customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume,” Williams stated.
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Following the charges, KuCoin announced a $10 million token airdrop following the withdrawals and allegations. Johnny Lyu, KuCoin’s CEO, claimed that this initiative aims to compensate those affected by the recent withdrawal delays and to express gratitude for their loyalty during these challenging times.
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