KuCoin’s KCS Token Drops Amid Insolvency Rumors: Analysis

KuCoin’s KCS token drops amid the latest insolvency rumors that stemmed from the exchange halting withdrawals, urging traders to sell off their holdings so let’s read more today in our latest cryptocurrency news.

The price of Kucoin’s KCS token tanked in the past week after some insolvency rumors. Kucoin was down 17.34% in the past week and traded for $8.75 according to CoinMarketcap. Kucoin is the fifth biggest exchange in the world with a 24-hour trading volume of $928 million and its KCS token is the 49^th asset on the CMC with a market cap of $858 million. Earlier this week, rumors spread out on Twitter that KuCoin will halt withdrawals because it was about to collapse however the CEO Johnny Lyu responded by saying that the company doesn’t have exposure to Babel Finance, Three Arrows Capital, or LUNA. He also added that KuCoin reserves the right to take legal action against all those that spread false rumors:

“No ‘immense suffer’ from any ‘coin collapse’, no plan to halt withdrawal, everything on KuCoin is operating well.”

Be aware of FUDs!

Not sure who's spreading these sheer rumors, 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.

— Johnny_KuCoin (@lyu_johnny) July 2, 2022

Lyu was referring to the recent meltdowns in the crypto ecosystem like the one with Luna, the governance token of the Terra ecosystem which saw billions of dollars in value being wiped out last month after the Terra collapse. We also saw the crash of Three Arrows Capital which filed for bankruptcy and the lending platform Babel Finance which last month suspended redemptions and withdrawals. These examples point to the liquidity issue in the crypto ecosystem as digital assets drop in price.

Lyu also responded to people asking if Kucoin was exposed to Celsius which is close to bankruptcy and said only “Nope.” Amid the crypto crash that enhanced in the first week of May, rumors turned out to be mostly correct including the ones of insolvency of Celsius, BlockFi, and Three Arrows Capital but Lyu insists that the exchange is doing fine:

 “We are one of the few platforms that are still hiring.”

He added that KuCoin is more active now in the bear market and KCS is up over the past 24 hours as with most other cryptocurrneices but it still has the worst weekly performance out of the major digital assets in the past week.