- US regulators recently filed several complaints against KuCoin.
- Following the charges, users have been panicking and withdrawing their assets.
- Still, despite the fallout, the exchange remains resilient.
KuCoin recently found itself tangled in a web of accusations cast by the US DOJ and the CFTC. The regulators alleged the crypto exchange facilitated numerous violations, from money laundering to illegal operations.
In the aftermath of the regulatory storm, KuCoin bore the brunt of increasing outflows and waning dominance in the market, deeply hurting its prospects. However, despite the chaos, the exchange stands tall.
KuCoin’s Dominance Wanes
In the past week, the CFTC and the US DOJ unleashed a barrage of complaints against KuCoin and its founders, alleging violations ranging from offering unregistered products to illegally facilitating the flow of an estimated $9 billion in illicit funds.
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In the wake of the regulators’ pile of charges, users panicked, fearing a repeat of an FTX-like situation from happening, and hastily withdrew their funds. KuCoin, once a leading crypto exchange, saw its market share plummet, with daily volumes nosediving by a staggering 75% from $2 billion to just $520 million.
To put things into perspective, memecoins like DOGE boast a daily trading volume of $3 billion.
Adding insult to injury, market analytics revealed that the crypto exchange’s market share had more than halved as users sought refuge in what they perceived as safer exchanges and self-custodial wallets, including Coinbase, Binance, and OKX.
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The exodus of funds and dwindling market share painted a grim picture for KuCoin’s immediate future. However, despite the panic, the exchange has been holding up well.
KuCoin Remains Resilient
KuCoin has managed to weather the storm quite well despite facing a surge in user withdrawals. Although users have reported experiencing delays, the exchange continues to confidently facilitate token withdrawals. Interestingly, in response to the congestion, KuCoin even announced a $9 million airdrop initiative to offer some reprieve to users affected by the slow throughput.
On March 26 alone, the day of the complaint, KuCoin experienced an outflow of over $6000 million, mainly of ether and USDT. However, it’s worth noting that these flows only account for on-chain transactions between KuCoin and other exchanges or wallets, excluding those within KuCoin’s internal network.
In its latest asset reserve report dated March 31, KuCoin disclosed holdings of 16,240 bitcoins valued at $1.6 billion, 144,405 ether worth $470 million, $1.2 billion in USDT, and $59 million in USDC.
On the Flipside
- The DOJ asserts that KuCoin’s founders are “at large.”
- In December 2023, KuCoin agreed to settle charges from New York Attorney General Letitia James’ office for $22 million for allegedly operating an unregistered exchange.
- A CFTC commissioner criticized the regulator for overstepping its boundaries in the KuCoin case.
Why This Matters
KuCoin stands as one of the largest crypto exchanges in the world. The recent criminal charges it faces have undoubtedly cast a shadow on its reputation, evident in the increasing outflows. However, despite the prevailing fear, the exchange remains composed as it easily manages user withdrawals.
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