KuCoin Refutes Rumors Of Heavy Damage From LUNA

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2022-07-25 12:59:40

One of the most popular exchanges in the market today, Kucoin, continues to be entangled in a series of FUDs related to liquidity problems and “opacity” in business activities.

On July 23, a Twitter user named “otteroooo” published a series of evidence that the KuCoin exchange is hiding about their investment losses by taking advantage of user deposits.

KuCoin suffers a heavy loss because of LUNA/UST?

The first is a story related to the collapse of LUNA/UST in May, otteroooo explained that KuCoin is the preferred CEX exchange by users to trade LUNA/UST because KuCoin has the advantage of connecting directly to the Terra blockchain.

So users who buy UST on KuCoin can send UST directly to Terra ecosystem to use any dApp on Terra, especially Anchor Protocol – Terra’s “backbone” DeFi protocol with interest rates up to 20%. And if users want to put LUNA on the Ethereum blockchain to make money through DeFi products like farming, they must use wLUNA (the LUNA token represented on ETH).

Since LUNA/UST fell into the “death spiral” in May 2022, wLUNA has also plummeted from 80 USD to less than 0. Most of the investment funds invested in LUNA stand out such as Binance, Three Arrows Capital, Galaxy Digital or Pantera Capital are all seriously affected. Unexpectedly, the exchange holding the most wLUNA at the moment is none other than KuCoin, with almost 27% of the total supply of wLUNA circulating in the market.

It is normal for an exchange to become the largest holder of the total supply of a certain token in the market, because they are the organization that manages user funds, simply because a lot of investors deposit their funds. listed on an exchange for trading purposes, such as Binance. However, the case of KuCoin is very different, the exchange does not have a wLUNA trading pair. Also, this is not a user deposit either as wLUNA is not accepted as a deposit on KuCoin.

Therefore, otteroooo presents two possible possibilities, one is that Kucoin creates a private fund through operating profit such as exchange fees and then “bets” by buying wLUNA and losing everything. when LUNA/UST collapsed. In the second case, Kucoin could have used users’ money right on the exchange to “invest” wLUNA behind their back and failed.

“Testimony” of the witness inside KuCoin

otteroooo also publicized the message proof of a KuCoin employee, confirming that the exchange had really “played all hands” on LUNA and lost up to 500 million USD. This person is currently leaving KuCoin to avoid dealing with the troubles from the exchange.

“Hello, I am an employee of KuCoin. Kucoin recently raised capital, which cast doubt on a group of KuCoin employees, as KuCoin was operating profitably as stated by company management because the LUNA/UST crisis caused Kucoin to *fly** 400-500 million USD.

The most dangerous fact is that KuCoin is the number one support exchange of UST combined with the fact that the exchange has started to move customer deposits in a planned way in preparation for a layoff after raising more capital.”

In fact, in September 2020, KuCoin was hacked with 275 million USD and in May 2022 just before LUNA/UST collapsed, KuCoin raised 150 million USD at a valuation of 10 billion USDS and soon after. in 07/022, KuCoin continued to raise 10 million USD from Susq.

Because raising capital only 10 million USD after only 3 months raising 150 million USD, otteroooo I suspect this is just a move that adds credibility to the community that Kucoin is still doing well.

otteroooo continued to say that the whistleblower had a severe conflict with KuCoin CEO Johnny Lyu. After all, otteroooo decided to message Mr. Johnny Lyu directly to “expose” the whole truth, but it seems that KuCoin CEO still denies everything but there is no reasonable explanation for it. otteroooo.

CEO KuCoin voiced correction

Very quickly, KuCoin CEO Johnny Lyu posted a blog on the exchange’s official website to explain the incident. He said recent FUDs created by otteroooo is getting ridiculous and every time otteroooo contact the CEO, he did his best to answer this account’s question.

However, even if KuCoin explains everything, otteroooo still ignores the truth and continues to deliberately spread his FUD. While other users openly admitted their assumptions were wrong, otteroooo still very stubborn

In short, most of the conversation between Mr. Johnny Lyu and otteroooo is revolving around wLUNA. This account asked if Kucoin was exposed to wLUNA, he said “NO”.

Afterward, otteroooo asked why there are so many wLUNA in KuCoin wallet. Johnny Lyu explained that prior to the LUNA incident, KuCoin supported LUNA (now LUNC) transactions in two main chains – the Terra and ERC-20 blockchains. And at the time, the LUNA token on the ERC-20 was called Wrapped LUNA (wLUNA).

‘s last question otteroooo Is KuCoin ever supporting wLUNA deposit and withdrawal. Kucoin CEO shared that ERC-20 LUNA was supported in January 2021 and service was suspended in May 2022. That was the end of the conversation.

Besides, the CEO of KuCoin also stated that as an exchange, most of the funds in the KuCoin wallet do not belong to KuCoin, they belong to the users. Therefore, it is KuCoin’s responsibility to secure assets and ensure users can always withdraw in full whenever they want. Having a wallet that holds a lot of wLUNA does not necessarily mean that KuCoin is unilaterally holding a lot of these tokens.

As for the KuCoin employee’s accusation, he asserted that this action has no meaning for KuCoin because otteroooo cannot prove that this person is a former employee of KuCoin. Such fake photos can be easily created.

Finally, the CEO of KuCoin revealed that he himself also noticed that some stakeholders in the market are making accusations to the contrary otteroooo is trying to profit from spreading FUD or even blackmailing some platforms.

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