News & Analyses

Kucoin’s BTC, ETH, and USDT reserves dip after charges from US DoJ and CFTC

  • Kucoin’s reserves have been depleting as charges from US DoJ are prompting caution from users.
  • Daily trading volume and market share of Kucoin have dropped 284% and 50%, respectively, despite airdrop incentives, said Kaiko.
  • Kucoin is back on Google Play Store in India after FIU registration.

Crypto exchange Kucoin’s latest reserve certificates, dated March 31, show a significant decline in its reserves of Bitcoin (BTC), Ethereum (ETH), and Tether USD (USDT). This decline is accompanied by increased outflow, which has seen Kucoin’s market share drop more than 50% after charges from the US Department of Justice (DoJ) and the Commodity and Futures Trading Commission (CFTC).

Kucoin faces serious charges from the DoJ and CFTC

Kucoin and its founders were charged on March 26 by the DoJ for “conspiring to operate an unlicensed money transmitting business and (…) violate the Bank Secrecy Act.” The DoJ argued that Kucoin didn’t maintain a comprehensive anti-money laundering (AML) and know-your-customer (KYC) procedure that should have prevented its platform from being used in money laundering and terrorist financing operations. 

US Attorney Damian Williams said Kucoin’s operation outside the scope of the financial market allowed money launderers to use the platform to send and receive a combined $9 billion of suspected criminal funds. The CFTC also filed an enforcement action against the exchange for providing futures products without registering with the commission.

Also read: KuCoin Exchange to incentivize customers with $10 million airdrop amid DoJ, CFTC-related lawsuit

Kucoin is experiencing a significant drop in its assets reserve

Kucoin saw massive outflows worth $1.19 billion 24 hours after the charges. The decline since then is quite visible in its latest asset reserve certificate. Compared to its last reserve certificates from February 29, Kucoin witnessed an average decrease of nearly 23% among BTC, ETH, and USDT. Its BTC assets plunged more than 25%, while those of ETH and USDT were down 21.9% and 21.5%, respectively.

A report from research firm Kaiko measures the broader impact of the charges on Kucoin, as its daily trading volume has dropped from around $2 billion to $520 million. According to the report, its market share also dropped more than 50% despite Kucoin’s $10 million airdrop incentive to prevent users from leaving. The report also highlighted that most outflows in Kucoin went to onchain wallet addresses and centralized exchanges such as Coinbase, Binance, OKX, MEXC, etc.

Despite the uncertainty surrounding Kucoin, some Indian users have noted in several X posts on Wednesday that the exchange’s app is now back on the Google Play Store in India. This follows Kucoin’s successful registration with India’s Federal Intelligence Unit (FIU).

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