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KuCoin Faces the Abyss Due to DOJ and CFTC Lawsuit

kucoin doj cftc

TL;DR

  • KuCoin has faced a 50% decrease in its market share and a 75% drop in daily trading volume after facing charges from the US DOJ and CFTC.
  • DOJ’s accusations indicate that the exchange, along with two of its founders, allowed the laundering of over $9 billion through the platform, including transactions with the Tornado Cash mixer.
  • Since the lawsuit began, KuCoin has experienced a massive fund outflow, with over $1.2 billion withdrawn, and users have opted to move their assets to other platforms.

The KuCoin exchange has faced a setback in its market share and daily trading volume after the US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) filed charges against it. Since March 26th, KuCoin has suffered a 50% decrease in its market share, with daily trading volume dropping by around 75%.

DOJ’s allegations claim that KuCoin, along with two of its founders, violated money laundering laws, allowing the platform to be used to launder over $9 billion. For example, between August 2022 and November 2023, approximately 197 KuCoin deposit addresses indirectly or directly received $3.2 million in cryptocurrencies from the Tornado Cash mixer, which is part of a sanctioned list.

kucoin post

No Direct Interaction Detected Between KuCoin and Tornado Cash

Faced with this lawsuit, KuCoin has experienced a massive fund outflow, totaling over $1.2 billion since March 26th. This fund outflow has led users to move their assets to other platforms considered safer, such as Coinbase, Binance, and OKX, as well as self-custodied wallets.

Despite the exchange’s efforts to mitigate the effects, such as announcing an $8.95 million distribution program for users affected by transaction congestion, the exchange’s market share has drastically decreased from 6.5% to 3%. Additionally, the company has been overshadowed by harsh criticism and questions about its compliance with regulations and the security of user funds.

On the other hand, analysts point out that, while no direct interactions were detected between KuCoin and Tornado Cash on the Ethereum blockchain, funds stolen from the exchange after a $280 million hack in 2020 were “privatized” using Tornado Cash functions, raising further concerns about the platform’s security and integrity.

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