Following a tumultuous period involving a regulatory investigation into its founders, KuCoin’s cryptocurrency balances experienced a significant downturn across various digital assets.
The latest asset reserve certificate from KuCoin revealed a substantial decline in Bitcoin (BTC) reserves, plummeting by over 25% amidst a U.S. Department of Justice (DOJ) lawsuit alleging bank acts and money laundering infractions.
The platform disclosed that users withdrew a staggering amount of Bitcoin, with balances dropping from over 16,000 in February to just over 12,000 by the end of the month, representing a difference of approximately 4,000 BTC within a span of one month.
Concurrently, users withdrew over 31,000 Ethereum (ETH), resulting in a 21% reduction in reserves, leaving KuCoin with nearly 113,000 ETH in stockpiles by last month’s close.
Stablecoin balances also witnessed a significant downturn, with a 21% and 33% decrease in Tether (USDT) and Circle’s USD Coin (USDC) reserves, respectively.
Notably, users withdrew a combined total of $265 million USDT and $19 million USDC between February 29 and March 31.
The regulatory woes for KuCoin intensified on March 26 when the U.S. Justice Department filed a lawsuit against the exchange and its founders, accusing them of violating the Bank Secrecy Act and engaging in unlawful money transfers linked to money laundering activities.
Co-founders Chun Gan and Ke Tang allegedly evaded anti-money laundering (AML) and Know Your Customer (KYC) regulations by concealing U.S. users on the platform, enabling the exchange to facilitate approximately $5 billion in suspicious transactions while flouting regulatory protocols.
In response to the lawsuit, users swiftly withdrew over $350 million from the platform within 24 hours, prompting company officials to reassure customers of the safety of their assets.
However, the regulatory scrutiny extended beyond the DOJ, as the U.S. Commodity Futures Trading Commission (CFTC) also charged KuCoin, raising concerns about potential regulatory overreach.
