CryptoQuant CEO Explains Why KuCoin Won’t End Like FTX
CryptoQuant CEO Ki Young Ju compared the situation of crypto exchange kucoin to that of FTX after it faced regulatory scrutiny. Amid the regulatory challenges facing KuCoin, Ju provided insights into why KuCoin is unlikely to face a similar fate to FTX.
KuCoin Has Sufficient Reserves for Withdrawals
Ju highlights the robustness of KuCoin’s on-chain reserves, especially for Bitcoin (BTC) and Ethereum (ETH) withdrawals. KuCoin’s reserves remain adequate, although it is facing withdrawal increases mostly from retail users. Moreover, the crypto exchange saw only a minor impact on its overall reserves.
According to Ju, KuCoin does not mix customers’ funds and displays organic reserves, a key difference from FTX’s practices. Also comparing KuCoin and FTX reserves, Ju highlighted other important differences. According to a snapshot shared by Ju, KuCoin’s reserves appeared stable and organic, while FTX’s reserves were close to zero.
Source: Ki Young Ju | X
This showed that FTX was trying to combine its customers’ funds with its own. Ju pointed out the large number of mass deposits and withdrawals on FTX’s charts, pointing to a lack of transparency and legally compliant financial practices. KuCoin, on the other hand, had more than 100,000 ETH and more than 7,000 BTC at that time, indicating smooth withdrawals for now.
According to 0xscope’s latest findings, the KuCoin exchange witnessed a significant net outflow of around $1.2 billion per day. Additionally, SpotOnChain’s analysis underlines the impact of these developments. In response to the criminal complaint, the US government reported that a significant amount of approximately $500 million was withdrawn from KuCoin’s Ethereum wallets.
Notable assets withdrawn include 274 million USDT, 15,500 ETH, 12 million FET, 50 million ONDO, and 95.38 million GHX. However, despite this apparent asset outflow, there is still a significant reserve in KuCoin’s hot wallets. It holds over $3.6 billion in assets on the Ethereum network.
Also Read: KuCoin Reaches $200 Million Withdrawal Surge After DOJ Charges
DoJ Legal Review
The US Department of Justice (DoJ) has charged KuCoin exchange and its co-founders Chun Gan and Ke Tang with violating various laws to expand their trading platform into one of the largest in the emerging industry. Damian Williams, US Attorney for the Southern District of New York, along with other top regulators, filed criminal charges against Kucoin, Gan and Tang.
They are charged with conspiracy to operate an unlicensed money transfer business and conspiracy to violate the Bank Secrecy Act. Darrin McCormack, Acting Special Agent in Charge of New York Homeland Security Investigations, also made a statement.
“Today, we have exposed one of the largest global cryptocurrency exchanges, where our investigation has revealed it for what it really is: an alleged multibillion-dollar criminal conspiracy. KuCoin has grown to serve more than 30 million customers despite its alleged failure to comply with the laws necessary to ensure the security and stability of our world’s digital banking infrastructure,” McCormack said.
Also Read: Breaking News: US Department of Justice Charges Kucoin and 2 Co-Founders with Violating AML Laws
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