KuCoin denies allegations of 77.6% BTC reserve drop following KYC mandate

KuCoin cryptocurrency exchange has denied claims that its BTC reserves have dropped since KYC rumors began on June 5, 2023, and the official announcement of the mandatory real-name system on June 28. According to CryptoQuant’s Onchain School data, the exchange’s Bitcoin reserves have plummeted by 77.6%.

Although the overall fall in reserves of centralized exchanges is an industry trend, the sharp decline of KuCoin has attracted attention. The analytics firm argued that it highlighted that users are highly sensitive to privacy and compliance policies.

KuCoin refutes claims of losing over 77% of its BTC reserves

The data presented is factually incorrect and highly misleading. KuCoin maintains strong BTC reserves, and these figures do not reflect our actual holdings.

We are deeply concerned by the publication of such unverified claims and urge @cryptoquant_com to act responsibly and…

— KuCoin (@kucoincom) May 6, 2025

KuCoin, the world’s largest digital asset exchange, has seen a dramatic drop in its Bitcoin reserves since mid-2023 when it revealed Know Your Customer (KYC) requirements. Onchain School acknowledged that KuCoin has seen a significant 77.6% drop in its Bitcoin reserves since that period.

The analytics company noted that the exchange’s BTC reserves declined from 18,300 BTC to just 4,100 BTC. The drop in reserves began after rumors of a KYC overhaul surfaced on June 5, 2023. 

“The data presented is factually incorrect and highly misleading. KuCoin maintains strong BTC reserves, and these figures do not reflect our actual holdings.”

–KuCoin.

The virtual asset exchange acknowledged that it was deeply concerned by the publication of “such unverified claims.” KuCoin also urged CryptoQuant to act responsibly and exercise greater diligence when sharing data that may impact market trust.

According to the exchange’s official website, it has a BTC Reserve Ratio of 106% at the time of publication. The crypto exchange also recorded its user assets at roughly 9,751 BTC, while its wallet assets at 10,306 BTC.

Onchain School shows a 77.6% decrease in KuCoin’s BTC reserves

KuCoin loses over 77% of its BTC reserves following mandatory KYC announcement

“On-chain data shows a drop from 18,300 BTC to just 4,100 BTC, marking a net outflow of 14,200 BTC — a 77.6% decrease.” – By @onchainschool pic.twitter.com/DCnjEHbTdv

— CryptoQuant.com (@cryptoquant_com) May 5, 2025

CryptoQuant argued that the outflows increased following the exchange’s official announcement on June 28, confirming that all newly registered users would be required to complete KYC verification on July 15. Onchain School argued that the outflow totaling over 14,000 BTC correlates closely with the timeline of KuCoin’s announcement to tighten its KYC procedures.

KuCoin’s case stands out for its speed and scale despite declining exchange reserves being a broader trend in the industry. Onchain School argued that the timing and magnitude of this outflow strongly correlated with the enforcement of KYC. The analytics company also added that the change highlights how users are affected by compliance-related changes, especially when privacy is perceived to be at risk.

KuCoin maintained that existing users must also complete KYC to access key services, including new deposits. The exchange’s users still retained limited access to features like withdrawals and redemptions on staking products.

The exchange’s KYC upgrade was part of its efforts to align with global anti-money laundering (AML) practices. KuCoin cited anti-money laundering obligations and global compliance standards as reasons for the shift.

Increased legal pressure in the U.S. was also the cause behind this policy change. In 2024, the U.S. The Attorney’s Office said that the exchange and its parent company, PEKEN GLOBAL LIMITED, had violated U.S. anti-money laundering and KYC regulations.

U.S. Attorney Danielle R. Sasson alleged that KuCoin failed to register as a money service business with FinCEN and deliberately avoided implementing basic AML regulations. The indictment noted that the exchange allowed billions of dollars in suspicious transactions to pass through its platform.

The indictment also alleged that the exchange had no meaningful KYC or AML program in place for years despite serving over 1.5 million U.S. customers and collecting more than $184 million in fees since 2017.

The exchange stated that due to the restrictive environment of global regulation and anti-money laundering practices, “KuCoin is going to conduct mandatory KYC.” The exchange agreed to pay a $297 million fine as part of a settlement and exit the U.S. market for at least two years.

The exchange noted that KYC for broker sub-accounts must be submitted through its API, as there is no web interface. KuCoin added that users are required to verify only once per account and that regular sub-accounts created under a master account remain unaffected by the KYC rule.

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