CryptoQuant CEO Elaborates on Why KuCoin's Fate Differs from FTX

Publish on 27 March 2024

CryptoQuant CEO Ki Young Ju compared the situation of crypto exchange KuCoin with that of FTX following KuCoin's legal scrutiny. Despite facing regulatory challenges, Ju pointed out key differences that suggest KuCoin is unlikely to face a fate similar to FTX.

Ju highlighted the robustness of KuCoin's on-chain reserves, particularly in Bitcoin (BTC) and Ethereum (ETH) withdrawals. Despite a surge in withdrawals, KuCoin's reserves remain sufficient, with only a minor impact observed overall. Unlike FTX, KuCoin does not commingle customers' funds and exhibits organic reserves.

Comparing KuCoin and FTX reserves, Ju noted significant differences. While KuCoin's reserves appeared stable and organic, FTX's reserves were close to zero, indicating commingling of customers' funds with their own.

Recent findings show a substantial net outflow from KuCoin totaling approximately $1.2 billion in a day, with a significant amount withdrawn from KuCoin's Ethereum wallets in response to the US government's criminal complaint. However, KuCoin's hot wallets still maintain a significant reserve, with over $3.6 billion worth of assets on the Ethereum network.

The US Department of Justice (DoJ) has accused KuCoin exchange and its co-founders of violating several laws, including running an unlicensed money-transmitting business and breaching the Bank Secrecy Act. However, Ju's analysis suggests that KuCoin's robust reserves and lack of commingling customers' funds may help it weather the legal scrutiny better than FTX.

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