Top crypto exchange KuCoin has lost over $1 billion in assets under management (AUM) as investors withdraw their assets following allegations against the exchange by the U.S government.
This outflow was recorded within 24 hours of filing the charges against the exchange. According to data firms Nansen and Arkham Intelligence, this outflow was unprecedented across Ethereum Virtual Machine-compatible (EVM) chains.
The data shows that net outflows from Ethereum alone amounted to $840 million in assets, while total inflow to the exchange within this period was just $140 million. Highlighting the impact of the incident, Nansen wrote that “This is more than a 15% drop in assets held by the exchange,” in a statement on Wednesday.
Data from Arkham Intelligence also confirmed that the total AUM of KuCoin has dropped from $6 billion to $4.8 billion as a result of the outflow. The drop is as a result of customers withdrawing their assets in response to the legal tussle, the company said.
KuCoin Assures Customers of Safety
In response to the panic created by the allegations against KuCoin, the exchange wrote on its official Twitter page that all funds are safe and the exchange’s legal team is looking into the allegations.
“KuCoin respects the laws and regulations of various countries and strictly adheres to compliance standards,” it said.
KuCoin is one of the leading crypto exchanges in the world, with over 30 million users across hundreds of countries. It offers several services, including buying and selling of assets, staking, as well as automated bot trading using AI crypto trading bots like PROFIT REX.
This is not the first time that the exchange is facing challenges in the U.S. KuCoin first faced allegations of malpractice in the state of New York, leading to the shutting down of its services in the state and paying of a fine.
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The Charges Against KuCoin
On Tuesday, the Federal prosecutors in Manhattan charged KuCoin with violating U.S. anti-money laundering laws by failing to screen and verify customers, allowing billions of dollars in illicit funds to be transferred since its founding in 2017.
The prosecutors further stated that the Seychelles-based exchange allowed U.S customers to trade on its platform without registering with the Treasury Department and putting in place procedures to verify clients’ identities based on U.S. law.
Furthermore, the U.S authorities are charging founders of the exchange, Chun Gan, 34, and Ke Tang, 39, both of Chinese origin, with conspiracy, saying they remain at large.
In a separate development, The U.S. Commodity Futures Trading Commission has filed a civil lawsuit against the exchange, alleging that it failed to register its futures and swaps activities with the commission.