On Tuesday, the US Division of Justice introduced felony fees in opposition to the worldwide crypto trade KuCoin and two of its founders, Chun Gan (also called “Michael”) and Ke Tang (also called “Eric”). The fees, associated to conspiring to function an unlicensed cash transmitting enterprise and violations of the Financial institution Secrecy Act, have stirred considerations amongst customers and traders about the way forward for the Seychelles-based trade, echoing fears paying homage to the FTX collapse.
Is KuCoin The Subsequent FTX?
In accordance with the official press release by the Southern District of New York, the indictment accuses KuCoin and its founders of intentionally failing to implement an enough anti-money laundering (AML) program. This negligence allegedly facilitated using the platform for cash laundering and terrorist financing actions.
Furthermore, the trade is accused of not sustaining needed procedures to confirm buyer identities and failing to report any suspicious actions.
Regardless of these severe allegations, CryptoQuant CEO Ki Younger Ju provided a contrasting view, specializing in the trade’s operational and monetary stability. By means of an announcement on X, Ju highlighted that, from an on-chain perspective, KuCoin’s Bitcoin (BTC) and Ethereum (ETH) reserves appear unaffected by the surge in withdrawals, primarily by retail customers.
Ju remarked, “On-chain wise, Kucoin 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.”
This reassurance comes at an important time when the reminiscence of FTX’s downfall, triggered by liquidity points and allegations of misusing buyer funds, nonetheless lingers within the minds of the crypto group. Ju made a transparent distinction between the reserve administration practices of KuCoin and FTX, underscoring the natural nature of KuCoin’s BTC and ETH reserves in distinction to the problematic dealing with of funds by FTX.
“Kucoin’s BTC and ETH reserves appear organic, unlike those of FTX. They don’t commingle customers’ funds,” Ju acknowledged and shared the Bitcoin and Ethereum trade reserves charts by CryptoQuant.
Ju contrasted these charts with the one’s from FTX, noting “Here are FTX reserves for comparison. FTX commingled customers’ funds with their funds; you can see a lot of bulk deposits/withdrawals in the charts. It doesn’t look organic.”
As of now, KuCoin maintain 5.949 BTC and 99.358 ETH, in line with CryptoQuant’s knowledge. The overall stability of KuCoin’s portfolio throughout a number of chains is valued at $4.764 billion, in line with Scopescan data.
At press time, the KuCoin token (KCS) traded at $11.42, down -20% because the information broke.
Featured picture from Shutterstock, chart from TradingView.com
