In an announcement made on March 27, CEO Johnny Lyu revealed that cryptocurrency exchange KuCoin will hold a massive airdrop of Bitcoin (BTC) and its native token KuCoin (KCS) worth $10 million. This comes just a day after the United States Justice Department charged the exchange and two of its founders. Lyu subtly referred to the federal charges in the beginning of his letter, comparing the airdrop to the exchange’s reimbursement of investors who suffered losses in the Confido rug pull incident. Lyu stated that the rules for the airdrop will be released in three days. The recent withdrawal delays on the exchange were likely due to a surge in volume as cautious customers left the platform. Therefore, the airdrop seeks to reward users who remained loyal to the exchange during its crisis.
It is worth noting that the timing of the airdrop is significant as KuCoin faced a wave of legal actions the day before. The Justice Department unveiled an indictment against the exchange’s founders for violations of the Bank Secrecy Act, including the absence of an Anti-Money Laundering program and operating an unlicensed money-transmitting business. Simultaneously, the Commodity Futures Trading Commission (CFTC) initiated a civil case against KuCoin for violations of the Commodity Exchange Act and CFTC regulations.
Despite these charges, KuCoin reassured its users that their assets were secure. However, the value of KCS dropped by 12% within 24 hours. It is important to acknowledge that airdrops carry risks, including potential regulatory actions. The Securities and Exchange Commission (SEC) highlighted these risks in its document titled “Framework for ‘Investment Contract’ Analysis of Digital Assets.”
In a different context, the DeFi Education Fund joined forces with a small clothing company from Texas that was sued by the SEC. The company sought a declaratory judgment to prevent the agency from prosecuting it for conducting an airdrop.
In an unrelated event, a cool green mayor has decided to give each resident a generous amount of Bitcoin.