KuCoin, a cryptocurrency exchange based in Seychelles, has received a vote of confidence from Ki Young Ju, the founder and CEO of crypto analytics service CryptoQuant, despite facing criminal allegations and concerns about its reserves from its users.
In a post on X, Ju stated that BTC and ETH withdrawals have increased, mainly driven by retail users, but the overall reserve has not been significantly affected. According to Ju, KuCoin does not mix customers’ funds and has enough reserves to process user withdrawals. From an on-chain perspective, Ju believes that the exchange is in a good state.
KuCoin’s total portfolio balance across multiple chains is reported to be $4.889 billion, as per Scopescan data.
On March 26, the United States Department of Justice accused KuCoin founders Chun Gan and Ke Tang of willfully neglecting to maintain an Anti-Money Laundering program at the exchange. They also alleged that the platform was being used for money laundering and terrorist financing.
Ju compared KuCoin’s reserves to those of the now-defunct crypto exchange FTX, noting that KuCoin has not mixed customer funds with its own reserves.
When crypto investors become aware of legal concerns or issues with an exchange’s reserve status, they typically withdraw their funds. This was evident when users withdrew billions of dollars from FTX after Binance’s former CEO, Changpeng “CZ” Zhao, tweeted about disposing of all their FTT token holdings.
Concerns about KuCoin’s reserves, or those of other major exchanges, can have a ripple effect in the wider market. When news of FTX’s collapse broke, the price of Bitcoin dropped by more than 20% in a week.
Despite the legal action against KuCoin’s founders, the market does not seem to be overly concerned. The Crypto Fear & Greed Index still indicates an extreme level of greed, currently at a score of 83.
In light of the collapse of FTX, many are questioning whether crypto exchanges can be trusted.