KuCoin Bitcoin balances drop over 20% following DOJ lawsuit

Cryptocurrency balances on KuCoin’s exchange fell across multiple digital assets as the platform navigates a regulatory probe involving its founders. 

According to KuCoin’s latest asset reserve certificate, the platform’s Bitcoin (BTC) stockpile dropped by over 25% following a U.S. Department of Justice (DOJ) lawsuit alleging bank acts and money laundering violations.

KuCoin reported that its users’ BTC decreased from over 16,000 in February to just over 12,000. The drop translates into a difference of around 4,000 BTC within a month. Users withdrew over 31,000 Ethereum (ETH) from the platform, leaving its reserves at nearly 113,000 ETH by the end of last month after a 21% reduction.

KuCoin recorded a 21% and 33% decline in stablecoin balances for Tether (USDT) and Circle’s USD Coin (USDC), respectively. Users cashed out $265 million USDT and $19 million USDC between Feb. 29 and March 31.

DOJ money laundering case against KuCoin

On March 26, the U.S. Justice Department sued KuCoin for violations engaged by the exchange itself and its founders. The platform was accused of breaking the Bank Secrecy Act and unlawful money transfers allegedly tied to laundering activity.

Co-founders Chun Gan and Ke Tang also allegedly circumvented anti-money laundering (AML) and KYC rules by hiding U.S. users on the crypto exchange. Attorney Damian Williams stated that the company disregarded local financial laws by facilitating $5 billion in suspicious funds and failing to comply with established regulatory policies. 

Users swiftly pulled over $350 million from the trading venue in 24 hours after the news broke, but company officials assured customers of asset safety, as crypto.news reported on March 27. 

The U.S. Commodity Futures Trading Commission (CFTC) also charged the world’s ninth-largest crypto exchange by reserves, per DefiLlama. However, CFTC Commissioner Caroline Pham suggested that her agency may have overreached in its enforcement action. 

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