KuCoin Announces $10 Million Airdrop Amidst US Justice Department Charges

Author: CoinSense

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KuCoin, a cryptocurrency exchange, has announced an airdrop of Bitcoin and its native KuCoin (KCS) token, totaling $10 million, to their loyal customers, despite recent US DOJ charges.

KuCoin CEO Johnny Lyu announced the news in a letter published on the exchange’s blog. The move comes amid legal challenges and charges filed by the United States Justice Department against the exchange and its founders.

KuCoin CEO Expresses Gratitude to Users, Announces Special Airdrop Event

On March 27th, KuCoin’s CEO, Johnny Lyu, expressed gratitude to the exchange’s user base in a letter posted on the exchange blog. Despite recent challenges, including withdrawal delays on March 26th and 27th, Lyu emphasized KuCoin’s commitment to ensuring the security of user assets and complying with regulatory standards. He thanked users for their support and trust during this tumultuous period.

Lyu mentioned that since their intervention, KuCoin’s mission has been to grow alongside the crypto industry and promote global recognition, acceptance, and affection for the sector. He drew parallels between the airdrop and the exchange’s past initiative to reimburse investors affected by the Confido rug pull.

The CEO explained that some users experienced withdrawal delays due to high volumes, possibly from cautious customers withdrawing from the exchange. To show appreciation for users’ support and patience, KuCoin will initiate a special airdrop event totaling $10 million in KCS and BTC. Lyu highlighted that this proactive compensation marked the origin of the title “People’s Exchange,” reflecting the community’s affirmation of KuCoin. He said,

“This act of proactive compensation marked the origin of the title “People’s Exchange”—a testament to the community’s original affirmation of us. We have always treasured this rare trust, and being “People’s Exchange” is our proudest label.”

While Lyu did not directly mention the legal issues faced by the exchange, the airdrop serves as a token of gratitude to loyal users who stood by KuCoin during its challenging period. Detailed rules for the airdrop will be released in three days, ensuring transparency and clarity for users.

KuCoin and Founders Indicted by U.S. Justice Department for Unlicensed Money Transmission

The timing of the airdrop is noteworthy, given the current legal actions against KuCoin. On March 26, United States Justice Department officials charged KuCoin and two of its founders with “conspiring to operate an unlicensed money-transmitting business” and violations of the Bank Secrecy Act, or BSA.

The U.S. Department of Justice said KuCoin founders Chun Gan and Ke Tang had willfully failed to maintain an anti-money laundering program at the exchange, leading to the platform being used for “money laundering and terrorist financing.” According to the Justice Department, KuCoin received over $5 billion and sent over $4 billion of “suspicious and criminal funds.” 

The Commodity Futures and Trade Commission (CFTC) also charged KuCoin with multiple violations of the Commodity Exchange Act. The CFTC is seeking to impose fines and trading bans, while the DoJ is seeking forfeiture and to pursue criminal penalties.

Following the Department of Justice’s filing of charges, KuCoin saw more than $1 billion worth of crypto withdrawals from the platform, which caused a 20% drop in assets under management. Nevertheless, the exchange comforted its customers, saying that all systems are running smoothly and the user funds are safe.

Although popular in the crypto community, the concept of airdrops carries its own risks, especially from a regulatory standpoint. The “Framework for ‘investment contract’ Analysis of Digital Assets by the Securities and Exchange Commission (SEC) has outlined that airdrops might still satisfy the criteria of investment of money under the Howey test.