Breaking: KuCoin Faces $1 Billion Outflow After US DoJ Indictment
Recently, KuCoin witnessed a massive $1 billion outflow within just 24 hours following an indictment issued by the US Department of Justice against the exchange and two of its founders, Chun Gan and Ke Tang. The indictment was based on allegations of violating anti-money laundering laws.
- The US Department of Justice disclosed that KuCoin had been operating as a money-transmitting business without registering with any US government entities, despite serving more than 30 million customers.
- KuCoin lacked any KYC (know-your-customer) or AML (anti-money laundering) program until as late as 2023.
KuCoin Witnesses Significant Reserve Depletion Post Indictment
According to data from on-chain analytics platform Scopescan, over $1 billion has been withdrawn from KuCoin in the past day. This significant outflow has resulted in a considerable dip in KuCoin’s reserves, reducing the platform’s total balance across all chains to $3.821 billion from $4.8 billion.
- Notable outflows included over $274 million in USDT, over $155 million in Ethereum, and $90 million in Bitcoin over the last 24 hours.
- Multiple crypto whales began withdrawing their funds from KuCoin following the DoJ’s indictment against the exchange.
Regulatory Pressure Mounting on KuCoin
Amidst a U.S. criminal investigation in 2023 and increasing regulatory scrutiny from China, KuCoin allegedly deliberated on the possibility of shutting down or selling the exchange. Speculation even circulated about potential acquisition talks involving competitors such as Binance.
CFTC Identifies ETH as Commodity
The US Commodity Futures Trading Commission (CFTC) has classified various prominent digital assets, including Bitcoin, Ethereum, Litecoin, and stablecoins like USDC and USDT, as “commodities” in its case against KuCoin. This move sheds new light on the ongoing debate regarding Ether’s potential classification as a security in the future.
- The CFTC stated its intention to pursue actions such as “disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.”
Hot Take: Implications of KuCoin’s Legal Troubles
In light of KuCoin’s recent ordeal with the US Department of Justice and the significant outflows seen on the exchange, the crypto community is closely monitoring the impact of these events on the broader market. Stay tuned for further developments as the situation unfolds.
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