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Cryptocurrency exchange KuCoin has recently made headlines after coming under the radar of the U.S. Department of Justice (DOJ). Facing severe accusations from the U.S. Government, KuCoin experienced a loss of $500 million due to withdrawals. Investors are seen to be withdrawing their assets as a precaution. However, there appears to be no interruption in the exchange’s operations.
Massive Withdrawals Following Accusations
According to the Blockchain analysis platform Spot On Chain, a massive outflow of funds from KuCoin occurred within just a few hours following the U.S. authorities’ accusations.
The $274 million in Tether (USDT), $55 million in Ethereum (ETH), $46 million in Ondo (ONDO), and other tokens withdrawn from KuCoin have inevitably caused concerns. However, KuCoin still holds approximately $3.6 billion in crypto assets in its hot wallets.
Charges Against KuCoin and Two Executives
KuCoin and two of its founders are accused of violating the Bank Secrecy Act. The exchange is alleged to have been used as a haven for money laundering. It has also been revealed that KuCoin is accused of misleading the U.S. about the total size of its user base.
KuCoin, facing compliance issues with U.S. regulations, has not obtained the necessary regulatory approvals despite U.S. citizens making up 17% of its users. Variant’s Chief Legal Officer Jake Chervinsky emphasizes that this is a lesson for anyone wanting to enter the U.S. market, stating, “If you want access to the U.S. market, you must comply with U.S. laws.”
KuCoin Continues Operations
Despite its legal troubles, KuCoin appears to be continuing its operations. The exchange claims that users’ assets are secure while its lawyers are reviewing the DOJ’s allegations.
However, the exchange admits that withdrawal transactions are taking longer than usual due to its trading volume, which highlights the situation KuCoin is in. In this yet-to-be-resolved process, the future remains uncertain for KuCoin and its users.
Regarding the lawsuit initiated by the U.S., I can say this based on the Binance example. It is highly likely that KuCoin will also opt for a settlement with the U.S. Department of Justice. Consequently, it may face a financial penalty. After such a financial burden, the exchange could continue its operations, just like in the Binance case.
