DOJ lawsuit causes KuCoin’s Bitcoin balances to plunge by more than 20%
KuCoin, a popular cryptocurrency exchange, has experienced a significant decrease in its digital asset reserves due to a regulatory investigation involving its founders. The exchange’s Bitcoin (BTC) holdings have dropped by more than 25% following a lawsuit filed by the U.S. Department of Justice (DOJ) alleging money laundering violations and illegal banking activities.
KuCoin reported that its users’ BTC balances have decreased from over 16,000 to just over 12,000 in the span of a month. This means that around 4,000 BTC have been withdrawn from the platform. Additionally, users have withdrawn over 31,000 Ethereum (ETH), resulting in a 21% reduction in the platform’s ETH reserves, which now stand at nearly 113,000 ETH.
The decline in balances is not limited to BTC and ETH. KuCoin has also recorded a 21% decrease in Tether (USDT) balances and a 33% decrease in Circle’s USD Coin (USDC) balances. Users have withdrawn $265 million USDT and $19 million USDC between February 29 and March 31.
The regulatory probe and subsequent decrease in cryptocurrency balances are a result of a lawsuit filed by the U.S. Justice Department against KuCoin on March 26. The exchange and its founders, Chun Gan and Ke Tang, have been accused of violating the Bank Secrecy Act and engaging in unlawful money transfers linked to money laundering activities. It is alleged that the exchange facilitated $5 billion in suspicious funds and failed to comply with financial laws and regulatory policies.
Following the news of the lawsuit, users swiftly withdrew over $350 million from the trading venue within 24 hours. However, the company has assured its customers that their assets are safe. The U.S. Commodity Futures Trading Commission (CFTC) has also charged KuCoin, making it the ninth-largest crypto exchange by reserves. However, CFTC Commissioner Caroline Pham has suggested that the agency may have overstepped its boundaries in its enforcement actions.
