KuCoin Sees Over $1 Billion Outflows After Money Laundering Charges in US

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Jai Pratap

Jai Pratap

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Jai serves as the Asia Desk Editor for Cryptonews.com, where he leads a diverse team of international reporters. Jai has over five years of experience covering the web3 industry.

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March 27, 2024 01:37 EDT

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Crypto exchange KuCoin saw over $1 billion in outflows in the last 24 hours after the US prosecutors announced charges against the exchange and two of its founders, Chun Gan and Ke Tang, for violating anti-money laundering laws.

The US Department of Justice revealed in its indictment that the crypto exchange did not register with any of the US government entities despite operating as a money-transmitting business and providing services to over 30 million customers.

The exchange also did not have any KYC (know-your-customer) or AML (anti-money laundering) program in place until 2023.

For the last 24 hours, #KuCoin has seen an outflow of $1.197B due to the news.

Include:
274M $USDT
19866 $ETH ($72M)

Users started to withdraw assets to avoid potential risks, for example, a whale withdrew 532B $PEPE ($4.35M) $PEPE 6 hours ago.

Data:https://t.co/PMnxW0etPY pic.twitter.com/hhXw0orG0f

— Scopescan (@0xScopescan) March 27, 2024

KuCoin Reserves Fall After US DoJ Indictment

As per on-chain analytics firm Scopescan, over $1 billion have left the platform in the last 24 hours. The current balance on KuCoin across all chains is $3.821 billion, a significant drop from $4.8 billion. Over $274 million in USDT, over $155 million in Ethereum, and $90 million in BTC flowed out from the exchange in the last 24 hours.

Several crypto whales also started pulling out their funds from KuCoin after the DoJ announced indictment against the exchange.

Due to the negative news of #KuCoin, whales are transferring assets from #KuCoin to other exchanges.

Whale"0x1abc" withdrew 54M $USDT from #KuCoin and transferred it to #OKX in the past 9 hours.

Whale"0x5212" withdrew 32M $USDT from #KuCoin and transferred it to #Bybit 50 mins… pic.twitter.com/7A74OrdtE7

— Lookonchain (@lookonchain) March 27, 2024

Facing a U.S. criminal probe in 2023 and mounting regulatory pressure from China, KuCoin reportedly contemplated closure or sale of the exchange. Whispers of a potential acquisition even reached competitors like Binance.

CFTC Labels ETH as Commodity

The US CFTC has classified several major digital assets, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and stablecoins like USDC and USDT, as “commodities”in its complaint against KuCoin. This indictment gives new light to the SEC’s ongoing investigation into the Ethereum Foundation, where they’re reportedly aiming to classify Ether (ETH) as a security.

The CFTC further said that it is seeking “disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations, as charged.”