KuCoin CEO Clarifies Insolvency Rumours as FUD Spreads

KuCoin Exchange’s Chief Executive Officer, Johnny Lyu, has continued to dispel all rumours that the trading platform is turning insolvent.


The rumours emanated from a now-deleted Twitter account with the name Otteroooo, claiming he had insider information about the exchange’s ongoing woes.

Otteroooo operates more like a whistleblower to alert users to companies’ struggles in the Centralized Finance (CeFi) ecosystem. It acquired a massive following up until it deleted the account.

Per the whistle blown on KuCoin, he calmed the exchange does not have the liquidity issue that it can use to process customer redemption as it concerns its exposure to the Terraform Labs ecosystem tokens LUNC and wLUNC. 

In a blog post with evidence of the conversations between himself and Otteroooo, Lyu explained that the only exposure that KuCoin has to the LUNA ecosystem tokens is because it supports the trading of those coins. 

“It is our responsibility to keep them secure and make sure users can always withdraw in full whenever they want. Having a LUNC wallet does not necessarily mean KuCoin as a company is holding lots of LUNC tokens, and I’m sure the difference is obvious,” the blog post clarified.

The digital currency ecosystem is now very sensitive to news of insolvency after the likes of Celsius Network, Voyager Digital, Babel Finance, and the likes shut down withdrawals, locking billions of dollars in collective funds belonging to clients. As a trading platform, KuCoin is bound to have much more user’s funds as deposits, and investors will want to avoid a situation where they are cut unable to access their funds.

While the FUD also suggested that the latest $10 million in strategic investment received by KuCoin from Susquehanna International Group is an attempt by the trading platform to cover its basis, Lyu has reiterated that there is no connection between the funding acquired and its insolvency concerns.

Image source: Shutterstock


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KuCoin CEO Quashes Rumours of FUD as its Exchange Might Halt Withdrawals

Over the weekend, the Chief Executive Officer of KuCoin Exchange Johnny Lyu allayed all Fears, Uncertainties, and Doubts (FUD) related to rumours spreading on Twitter as the trading platform may halt withdrawals due to the distress by the ongoing market meltdown in market.


Talking to Twitter, Lyu said there is absolutely no plan to halt withdrawals and that, unlike the claims that the firm is having liquidity issues, it has no exposure to crypto projects and companies that are struggling at the moment including LUNA, and Three Arrows Capital (3AC) amongst others.

“Be aware of FUDs! Not sure who’s spreading these sheer rumours, and what their intentions are, but #KuCoin does not have any exposure to LUNA, 3AC, Babel, etc. No “immense suffer” from any “coin collapse”, no plan to halt withdrawal, everything on KuCoin is operating well,” Lyu said in his short Twitter thread.

In a bid to further exert his stance that the exchange is faring well, the CEO shared the company’s milestones as the trying times the ecosystem is facing gain momentum. Lyu implied that the exchange has sufficient liquidity, going by its massive valuation of $10 billion following the $150 million raised back in May. 

KuCoin is more active in this bear market and comes off as one of the fear exchanges after Binance and BitGet which has announced plans to continually hire before the end of the year, Lyu added. Slamming those spreading unverified information, Lyu said the company’s performance report for the first quarter of the year will soon be released.

“Being transparent is always one of our key principles. We will soon publish our 2022 H1 review report where you can know more about our operations. For FUDers who intentionally spread unverified info., KuCoin reserves the right to take legal action. Don’t FUD, BUIDL,” he said.

Justifiably so, a lot of crypto-linked companies, including Three Arrows Capital (3AC), and Babel Finance are currently highly distressed currently.

Image source: Shutterstock


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Reddit User Calls Out KuCoin Over ≈$50,000 Stuck On Exchange

The heat has been on crypto exchange KuCoin recently after a Reddit user called them out on Reddit regarding funds being held on the exchange. The user had first taken to Reddit to vent their frustrations in an open letter to CEO Johnny Lyu after making no progress with its customer support representatives. According to the user’s statements, the exchange was withholding ≈$50K worth of crypto on the exchange.

The user explained that KuCoin had announced that they would be supporting a new BCH fork, eCash (XEC), leading them and many others to invest in the asset on the exchange. Problems arose when the exchange had run out of liquidity for the cryptocurrency. KuCoin users realize that they could not sell their holdings without doing so at a significant loss (selling for cents to the dollar).

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However, a much sinister issue arose when they found out they could not transfer the coins out either. Since then, the user claimed that they have had ≈$50,000 worth of crypto being withheld by the exchange for over six months and still have not been allowed to move their coins.

Open Letter To KuCoin CEO

The Reddit user who goes by the username u/BCHcain had first drawn attention to the issue when they posted an open letter to CEO Johnny Lyu about four days ago. In the open letter, they include screenshots of their communications with the support staff dating back at least six months. The user explained that KuCoin had been giving them the runaround with no real indication of solving the issue and had ‘receipts’ to back this up.

CEO Johnny Lyu had responded to this open letter about three days after posting, giving what could be described as a low-effort response to a clearly distressed user.

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“Thanks for bringing it up. The upgrade is underway, and since it’s not just a simple rename or rebrand, we still need some time to complete it. Thanks for your patience and understanding,” Lyu wrote.

Reddit users had called out the CEO over the response, pointing out that the answer proved everything that the user had claimed in their post; that the exchange did not seem interested in solving their issue.

Calling On The Community

Four days after the open letter had been posted, the u/BCHcain had once again posted to Reddit. This time calling on the community to help amplify the issue, pointing out that if it could happen to them, then it could happen to anyone. This follow-up post garnered considerably more attention than the open letter.

The issue has raised concerns over the power centralized exchanges have over the funds of users. In a way, these centralized exchanges control user funds the same way as banks, something that the crypto enthusiasts are fervently trying to do away with.

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The crypto exchange had also been called out on the same platform by another user who claimed that KuCoin was using Cloudfare to deny access to the platform during bull rallies in order to force users to liquidate and then profit from these liquidations.

KuCoin is yet to respond to the second post. However, it continues to spark conversations around issues with KuCoin and CEXes in general. As of the time of writing, the post has received 5.3K upvotes and has 1.6K comments.

Featured image from CoinDesk, chart from TradingView.com


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