KuCoin Hit by DOJ Charges: User Assets Drop 20%

KuCoin, a cryptocurrency exchange, saw a significant drop in user assets following charges from the US Department of Justice (DOJ).

Following last week’s announcement of charges by the US Department of Justice (DOJ), cryptocurrency exchange KuCoin published its most recent asset reserve certificate, revealing a roughly 20% drop in user assets on the platform.

Compared to February, the user’s Bitcoin (BTC) holdings fell 25.4% to 12,114, as reported in the document. Similarly, the user’s total Ethereum (ETH) assets fell by 21.91% to 112,000. In addition, there was a decline of 21.5%, with customers’ USDT assets reaching 963 million.

Kaiko, a blockchain research and analytics organization, also reported that on March 26, outflows from wallets identified as KuCoin exceeded inflows by a significant margin, reaching $600 million. Particularly, the tokens transferred out were ETH and USDT. People who have KuCoin have begun moving their money to other cryptocurrency exchanges or wallets that they keep for themselves. Market makers leaving the platform may explain some of the outflows.

At the same time, KuCoin’s percentage of daily trades fell by 50%. The daily volume dropped from $2 billion to $520 million, a reduction of over 75%.

KuCoin faces DOJ anti-money laundering law violations accusations, while CFTC files parallel civil action to recover assets

The DOJ accused the exchange and its co-founders, Chun Gan and Ke Tang, of breaking anti-money laundering (AML) rules. Over $9 billion in alleged money laundering activities were allegedly enabled via KuCoin. The indictment stated that KuCoin willfully disregarded US anti-money-laundering and know-your-customer (KYC) laws by making up a story about not having any US customers, even though it actually had a large US clientele.

The Commodity Futures Trading Commission (CFTC) hit KuCoin with a parallel civil action at the same time for operating an illegal digital asset derivatives exchange. The CFTC is seeking disgorgement, civil monetary penalties, an injunction to stop further violations, and permanent bans on trading and registration.

According to KuCoin’s response on social media platform X, the company’s operations are running well, and customers can rest confident that their assets are safe. The correspondence acknowledged the reports and indicated that legal counsel is investigating the details.

But after the announcements, more and more people wanted to get their tokens off the site. This led to a delay in the withdrawal processing times.

Users hit by the withdrawal bottleneck can take part in an $8.95 million airdrop scheme that the site has launched. Users who refrained from withdrawing assets during this period also received a larger airdrop.