A recent Proof of Reserves (PoR) report published about the cryptocurrency exchange KuCoin, which has faced significant difficulties, showed a surprising 20% drop in the reserves held in users’ wallets. This decrease in reserves occurred after a wave of withdrawals by users and the emergence of allegations and an indictment of money laundering violations directed at the exchange by the U.S. government.
KuCoin Users Withdraw Their Funds
The latest PoR from KuCoin revealed that the asset reserve ratio held for users consisted of 12,115 Bitcoin (BTC), 112,763 Ethereum (ETH), 963.72 million USDT, and 39.35 million USDC. The current reserve amounts indicate a significant decrease in assets in the leading cryptocurrencies of the market.
When compared to the last PoR from February, there was a noticeable decrease in users’ BTC assets by 25.4%, ETH by 21.91%, and USDT by 21.5%.
The drop in reserves parallels an increase in withdrawal transactions from the exchange. Recently, it was observed that KuCoin experienced withdrawal transactions totaling over $1.2 billion. On the other hand, a more in-depth examination showed that 274 million USDT and 15,500 ETH were withdrawn from KuCoin’s Ethereum wallets within a few hours.
KuCoin and the Legal Process
The withdrawal transactions occurred after the New York prosecutor presented an indictment alleging that KuCoin and its founders were involved in crimes worth billions of dollars.
U.S. Attorney Damian Williams made an official statement recently. In his statement, he alleged that KuCoin operated as an unlicensed money transfer business.
KuCoin and its founders intentionally tried to conceal the fact that a significant number of U.S. users were trading on KuCoin’s platform. Indeed, it is alleged that KuCoin benefited from its large U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars in daily transactions and trillions of dollars in annual trading volume.
Following the allegations, KuCoin attempted to mitigate the situation by announcing a $10 million token airdrop after the withdrawal transactions and claims. KuCoin’s CEO Johnny Lyu made a statement expressing gratitude to users during the period the process was shared.
