As the sell-off in the cryptocurrency market continues, sparked by the FTX liquidity crisis spilling over to other participants in the sector, the CEO of KuCoin decided to publicly address the allegations that his trading platform was struggling with insolvency.
Indeed, KuCoin’s CEO Johnny Lyu criticized the recent ‘FUD’ (Fear, Uncertainty, and Doubt) around his crypto exchange which, as he said, was “probably the tenth time in the past 6 months some rumor on Twitter circulates that KuCoin is ‘insolvent,’” in his blog post published on November 9.
Specifically, after crypto analytics platform Nansen published its exchange stablecoin outflow chart, which, according to Lyu, mistakingly showed an ERC20 to TRC20 translation as $300 million draining from his platform, rumors started circulating about KuCoin being in trouble.
As he explained, the information was a simple misinterpretation which has been cleared in the meantime:
“We went to great lengths to clarify with Nansen that it was mainly a currency translation from ERC20 USDT to TRC20 USDT. (…) Nansen acknowledged that they only track ERC20 tokens, so the TRC20 USDT did not show up and was mistakenly interpreted as an outflow.”
To drive his point home, Lyu posted Tronscan and Etherscan explorer screenshots and links to transaction details that support his argument. Notably, the Tronscan screenshot shows the relevant TRC-20 USDT inflow transaction to “KuCoin-Cold” crypto wallet:
At the same time, the Etherscan screenshot demonstrates the recorded ERC-20 USDT outflow transaction from the crypto exchange’s “KuCoin 6” address:
Meanwhile, Nansen’s CEO, Alex Svanevik, posted an explanation of the matter as well, confirming that the “outflow you’re seeing on KuCoin comes from a single $300m USDT network swap to Tron.”
Dedication to transparency
Finally, Lyu promised users that “just like in the past, we would never misappropriate user funds and we will ensure full transparency,” adding that:
“KuCoin will always guarantee 1:1 withdrawal. (…) To those who are still concerned, we will release our Merkle tree proof-of-reserves or POF in one month.”
This announcement is in line with the platform’s reputation as ‘the People’s Exchange’ and the stance of its fellow exchanges Binance and OKX, which both stressed the necessity of carrying out the Proof of funds (POF) and also promised to publish theirs soon.