KuCoin’s Legal Woes Compared to FTX
CryptoQuant CEO Ki Young Ju recently drew comparisons between crypto exchanges KuCoin and FTX amidst KuCoin facing legal scrutiny.
Despite challenges, Ju highlighted why KuCoin is less likely to encounter a fate similar to FTX.
Ju underscored the strength of KuCoin’s on-chain reserves, particularly in Bitcoin (BTC) and Ethereum (ETH) withdrawals, noting that reserves remain ample despite increased withdrawals, mainly from retail users. Unlike FTX, KuCoin doesn’t mix customers’ funds and exhibits organic reserves.
On-chain wise, @kucoincom is fine.$BTC and $ETH withdrawals surged, driven mainly by retail users, with a small impact on the overall reserve.
They appear to not commingle customers' funds and have sufficient reserves to process user withdrawals. pic.twitter.com/p4bJJpwnFJ
— Ki Young Ju (@ki_young_ju) March 27, 2024
While KuCoin’s reserves appear stable and organic, FTX’s reserves were close to zero, indicating commingling of funds. Ju pointed out significant differences in deposit and withdrawal patterns between the two exchanges, suggesting a lack of transparency and compliance in FTX’s financial practices.
Recent data from 0xscope revealed a substantial net outflow of approximately $1.2 billion from KuCoin in a day. SpotOnChain’s analysis further highlighted the impact, reporting approximately $500 million withdrawn from KuCoin’s Ethereum wallets following the US government’s criminal complaint.
READ MORE: BitMEX Co-Founder Predicts Ethereum Demand Surge with ETF Approval
Despite significant outflows, KuCoin’s hot wallets still maintain substantial reserves, holding over $3.6 billion worth of assets on the Ethereum network.
The US Department of Justice (DoJ) recently charged KuCoin exchange and its co-founders Chun Gan and Ke Tang with violating multiple laws, including running an unlicensed money-transmitting business and breaching the Bank Secrecy Act. Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations, Darrin McCormack, described KuCoin as an “alleged multibillion-dollar criminal conspiracy” for its failure to follow necessary laws.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
