- Withdrawals from crypto exchange KuCoin spiked to over $1 billion on Tuesday after US authorities announced charges against the exchange for AML violations.
- The DOJ and CFTC accused KuCoin of facilitating illegal transactions and failing to implement proper KYC procedures.
- KuCoin stated it takes legal obligations seriously and will cooperate with authorities, while assuring users its services remain secure.
Withdrawals from the KuCoin cryptocurrency exchange spiked to over $1 billion in crypto assets on Tuesday, March 27, 2024, amid a regulatory clampdown by U.S. authorities.
Background on KuCoin Exchange
KuCoin is a popular crypto exchange that allows users to trade hundreds of digital assets. The exchange is registered in Seychelles but operates globally.
On Tuesday, the U.S. Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) announced civil and criminal charges against KuCoin and two of its founders for allegedly violating U.S. anti-money laundering laws.
Prosecutors claim that KuCoin facilitated illegal transactions and failed to implement proper know-your-customer procedures.
Spike in Withdrawals
Shortly after the charges were announced, analytics firms noticed a sharp spike in withdrawals from KuCoin.
Over $1 billion worth of crypto assets were withdrawn from the exchange on Tuesday alone, according to data from Nansen and Arkham. This is far higher than normal daily withdrawal volumes for KuCoin.
The sudden surge suggests that some KuCoin users rushed to pull their funds from the exchange in response to the regulatory crackdown. There are concerns that KuCoin may freeze withdrawals if authorities pursue further action.
KuCoin’s Response
In a statement, KuCoin said it takes its legal obligations “extremely seriously” and will cooperate fully with authorities.
The exchange emphasized that operations continue as normal. KuCoin also assured users that its services “remain secure and uninterrupted.”
Conclusion
The incident highlights how quickly exchange users can react to potential issues by withdrawing their crypto funds. It also underscores the risks for exchanges of running afoul of U.S. anti-money laundering rules.
Going forward, KuCoin will likely boost its compliance procedures as it contends with the DOJ and CFTC lawsuit. However, the spike in withdrawals suggests that some customers are losing trust in the embattled exchange.
