KuCoin, a leading cryptocurrency exchange, has vehemently denied allegations that it lost over 77% of its Bitcoin reserves since 2023( Kucoin Bitcoin reserve).
The claims, made by Onchain School, a data-focused platform, suggested that KuCoin’s Bitcoin holdings plummeted from 18,300 BTC in June 2023 to approximately 4,100 BTC by April 2025.
However, KuCoin has labeled these figures as “misleading and inaccurate,” emphasizing its commitment to transparency and responsible reporting.
The Controversy Unfolds
The controversy began when Onchain School released a report citing data from CryptoQuant, which showed a significant decline in KuCoin’s Bitcoin reserves.
According to the report, the exchange’s Bitcoin holdings dropped by around 14,200 BTC, attributing the steep decline to KuCoin’s introduction of mandatory Know Your Customer (KYC) rules in mid-2023.
The KYC policy, which took effect in August 2023, required all users to complete identity verification to access the platform’s services.
Onchain School suggested that the compliance push prompted users to withdraw funds, citing privacy concerns.
The analytics platform also claimed that KuCoin’s situation reflects a broader trend of declining Bitcoin reserves across centralized exchanges.
However, it stressed that KuCoin’s case was notably more severe due to its timing and scale.
KuCoin’s Response
KuCoin has rejected the findings, expressing concern over what it described as “irresponsible reporting.”
The exchange stated that the reported numbers do not reflect its reserve levels and warned that inaccurate data could erode public confidence.
To reinforce its position, KuCoin shared its 30th Proof of Reserves, which showed that it held a 106% Bitcoin reserve ratio. This includes about 9,751 BTC in user funds and 10,306 BTC in exchange-controlled wallets.
The report also showed reserve coverage of:
– *116% for Ethereum*
– *114% for USDT*
– *109% for USDC*
KuCoin emphasized that its Proof of Reserves demonstrates its commitment to transparency and responsible reporting.
The exchange urged CryptoQuant to act responsibly and exercise greater diligence when sharing data that may impact market trust.
The Impact of KYC on User Behavior
The introduction of mandatory KYC rules has sparked a heated debate in the crypto community.
While some argue that KYC is necessary to prevent unlawful activities and guarantee a secure investment space for users, others believe that it compromises user privacy and autonomy.
KuCoin’s experience suggests that users are highly sensitive to compliance-related changes, especially when privacy is perceived to be at risk.
The significant decline in Bitcoin reserves reflects user worries over privacy, safety of funds, and regulation.
The Future of Crypto Exchanges
KuCoin’s incident highlights the challenges faced by crypto exchanges in balancing user autonomy and compliance.
As governments’ involvement in the crypto space increases, regulations become unavoidable.
However, exchanges must consider regaining user trust without sacrificing compliance.
Some platforms, including OKX and Binance, have opted to delay KYC mandates, while others are exploring alternative solutions to maintain user trust.
KuCoin’s case serves as a reminder of the importance of trust in the tech world and the need for exchanges to prioritize user autonomy and compliance.
Conclusion
The controversy surrounding KuCoin’s Bitcoin reserves highlights the complexities of the crypto space.
While the exchange has denied allegations of a significant decline in its Bitcoin holdings, the incident underscores the challenges faced by crypto exchanges in balancing user autonomy and compliance.
As the crypto industry continues to evolve, it is essential for exchanges to prioritize transparency, responsible reporting, and user trust.
KuCoin’s commitment to Proof of Reserves and its emphasis on transparency demonstrate its efforts to maintain user confidence in the face of controversy
