Recent legal battles with US authorities have had a significant impact on KuCoin, resulting in a decline in user assets on the exchange. The latest proof-of-reserve certificate from KuCoin reveals that users’ Bitcoin holdings fell by 25.4% to 12,114 BTC in March, while Ethereum balances dropped by approximately 22% to around 112,000 ETH. Similarly, the amount of Tether’s USDT held by users on the exchange also decreased by about 22% to 963 million USDT tokens.
Outflows and Declines in Trading Volume
Data from DeFiLlama further supports the downward trend, with over $843 million worth of digital assets withdrawn from the platform in the past week alone. This has led to KuCoin’s total balance shrinking from over $4.3 billion to $3.2 billion as of the latest report. Despite these declines and outflows, the exchange’s proof-of-reserves certificate confirms that the firm has fully backed assets within its system, with collateralization levels ranging from 109-115%.
KuCoin’s recent challenges can be attributed to lawsuits from US authorities, including the US Department of Justice and the Commodity and Futures Trading Commission (CFTC). These legal battles have led to a significant decline in the exchange’s market share and trading volume. According to Kaiko data, KuCoin’s daily trading volume has dropped to around $520 million from approximately $2 billion, with market share falling from about 6.5% to less than 3%. Users have reportedly transferred their assets to rival centralized exchanges like Coinbase, Binance, and OKX, contributing to this decline.
Despite the legal challenges and decline in user assets, KuCoin has been proactive in addressing the situation. CEO Johnny Lyu has highlighted the exchange’s compliance efforts and the continued optimal operation of the platform. In response to withdrawal delays between March 26 and 28, KuCoin has announced plans for a special $8.9 million airdrop of its KCS native token and Bitcoin to impacted users. This airdrop is designed to compensate users for any inconvenience caused and reward loyalty. Lyu emphasized the importance of user trust and satisfaction in these challenging times.