More than $500 million was withdrawn from the KuCoin exchange after US accusations
According to data from various analytics companies, including DefiLlama, Nansen and SpotOnChain, there has been an increase in withdrawal volumes among various categories of users, including large players, investment funds, and professional traders and market makers.
On March 26, US authorities said that the exchange and its founders operated without proper legal authorization and violated bank secrecy and anti-money laundering (AML) laws.
The US Department of Justice has charged the exchange and its founders, Chinese citizens Chun Gang and Ke Tang, with violating bank secrecy laws and transferring funds without an appropriate license. US authorities claim that the exchange did not comply with anti-money laundering measures (AML - Anti-Money Laundering) and did not monitor suspicious transactions, which contributed to the use of KuCoin by criminals to launder illegally obtained funds.
In addition, the US Commodity Futures Trading Commission (CFTC) also brought its charges against the KuCoin exchange.
In addition, the US Commodity Futures Trading Commission (CFTC) also brought its charges against the KuCoin exchange.
US federal prosecutors accused the KuCoin cryptocurrency exchange and its founders of laundering $9 billion. The founders of the platform did not implement KYC/AML procedures for over 30 million clients. Between August 2022 and November 2023, 197 KuCoin deposit addresses received more than $3.2 million worth of cryptocurrencies from the sanctioned mixer Tornado Cash. The exchange was also not registered with FinCEN as a financial services company, which likely helped it grow a large customer base in the States and become one of the largest cryptocurrency exchanges in the world.
Conclusions from the KuCoin exchange
During the reporting period, the exchange experienced a significant outflow of Ethereum-based tokens. According to data from SpotOnChain, the total withdrawal volume was about $500 million in different tokens:
$274 million in USDT,
$55 million in ETH, 5
$46 million in ONDO,
$34 million in FET and other assets.
KuCoin net outflow (Source: 0xScope)
In addition to this, LookonChain discovered two large accounts that together withdrew $86 million on platforms such as OKX and Bybit. Given the withdrawals, many users have noted delays, raising concerns similar to the FTX crisis-like situation.
At the same time, according to aggregator DeFiLlama, KuCoin hot wallets still hold more than $3.7 billion in various cryptocurrency assets. The CEO of CryptoQuant reassured the public by stating that the platform has enough reserves to process withdrawals. He also emphasized that KuCoin strictly segregates the funds of its clients.
Following the news, the native token KuCoin fell 15%, according to CoinGecko.
At the same time, according to aggregator DeFiLlama, KuCoin hot wallets still hold more than $3.7 billion in various cryptocurrency assets. The CEO of CryptoQuant reassured the public by stating that the platform has enough reserves to process withdrawals. He also emphasized that KuCoin strictly segregates the funds of its clients.
Following the news, the native token KuCoin fell 15%, according to CoinGecko.
Source: CoinGecko.
KuCoin reaction
Johnny Lyu, CEO of KuCoin, noted that the legal disputes faced by the exchange are not unique, but represent "common growth and regulatory challenges faced by emerging industries.”
“There are often regulatory gaps early in development, but as the industry matures, we move toward and embrace compliance and standardization.” - noted Johnny Lyu.
He also noted that KuCoin recently became the first global exchange to list in India, and stressed that this demonstrates the exchange's "respect for local regulations and a proactive approach to compliance." Johnny Liu stressed that the exchange continues to operate effectively, and the company's lawyers are investigating issues related to the allegations.
AML Crypto opinion
As the AML Crypto team, we understand the seriousness of the allegations against the KuCoin exchange. Allegations of money laundering, lack of KYC/AML procedures and violations of bank secrecy laws certainly require attention from regulators and investors.
However, we warn against panic withdrawal of funds and urge you to monitor the development of the situation and official statements. Responses to allegations must be based on facts and careful analysis to avoid negative consequences for the market and participants. After all, a panicked mood and a general withdrawal of funds can negatively affect the exchange itself and its clients, even if the charges are subsequently dropped.
We also remind you that you can check your crypto wallet for cleanliness, perform AML address verification, track a transaction - this and more can be done in our solution Btrace. Free AML wallet verification for every new user.
However, we warn against panic withdrawal of funds and urge you to monitor the development of the situation and official statements. Responses to allegations must be based on facts and careful analysis to avoid negative consequences for the market and participants. After all, a panicked mood and a general withdrawal of funds can negatively affect the exchange itself and its clients, even if the charges are subsequently dropped.
We also remind you that you can check your crypto wallet for cleanliness, perform AML address verification, track a transaction - this and more can be done in our solution Btrace. Free AML wallet verification for every new user.
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