KuCoin Has Allegedly Given Tokens 'Volume-Boosting' Offers

Hong Kong-based cryptocurrency exchange KuCoin is at the center of a new controversy in the cryptocurrency space, as some believe some ‘volume-boosting’ offers that allegedly came from it are implying it’s engaging in wash trading.

According to an investigation carried out by The Block, KuCoin has reportedly approached some of the projects behind 16 tokens it recently delisted, asking them to pay up to $180,000 in “volume-boosting fees,” or get delisted from its platform, which has over 5 million registered users.

Per the news outlet, when cryptocurrencies fall into the bottom 18% of tokens by trading volume on KuCoin, they’re put on “Special Treatment rules.” Some of the projects behind these – specifically The Block mentions Jibrel, Publica, Unikrn, and Encrpgen – were advised to pump their trading volume to recover.

Jibrel’s COO Talal Tabbaa was quoted as saying:

We received an email saying ‘you have the ability to improve your volume or you’ll be delisted. Then they recommended market-making firms that would help us reach the minimum daily volumes they set for projects. I was honestly shocked at the requests they were making

He added that KuCoin recommended two market-making options. The exchange also allegedly reinforced that the market makers could help Jibrel’s token reach the minimum trading volume to remain listed.

The news outlet claims KuCoin confirmed an email it saw was sent from one of the exchange’s employees. Taking his offer into account, Tabbaa claimed it was “basically to do wash trading. I’m 100% sure. Whenever there’s a [volume] guarantee, you know there’s something wrong.”

Jibrel eventually turned down the offer. David Koepsell, the CEO of Encrypgen, reportedly claims the firm was also encouraged to boost trading volume through an “extensive marketing campaign.”

KuCoin reportedly pitched him an “advanced marketing package,” priced at $90,000. After he refused to pay, the organization’s token ended up being delisted. Koepsell was quoted as saying:

We found that to be pretty disingenuous. They buy a bunch and then sell a bunch at market just to get the volume.

Another project, Publica, reportedly accepted the exchange’s offer, but eventually ended the deal as the fees grew “beyond what was originally agreed.” The CEO of Unikrn, Rahul Sood, claimed KuCoin came up with “fake your volume fees,” Notably, although he refused to pay Unikrn is still listed. Per his words, they’re trying to build a legitimate business, not a “marketplace for our token.”

Wash Trading 

The CEO of Coinroutes, Dave Wiesberger, reportedly told The Block that the cryptocurrency exchange’s alleged market making offers aren’t common with traditional liquidity providers, as “providing volume [is bad].” This,as it makes it “look like there’s more interest than there is” in a specific asset.

He added:

An exchange by its definition is meant to be a neutral party. Taking the other side of trades makes a massive conflict of interest in that model. Any market making subsidiary would need to have information barriers, and [be] audited.

If KuCoin was connecting the firms to legitimate market makers, things would be different, he concluded. Market makers, in traditional finance, are intermediaries that buy or sell a specific asset, while receiving a spread for the risk taken.

Crypto analyst Sylvian Ribes told the news outlet that Chinese exchanges call market making what is, in reality, wash trading. Wash trading sees an entity trade against itself, artificially pumping volume. The practice is illegal in regulated markets.

In reality, wash trading doesn’t boost liquidity. Although it inflates trading volumes, it doesn’t create real demand for the asset. While marketing campaigns could be legitimate, it isn’t clear whether KuCoin’s offer was.

KuCoin’s Response

The Block reportedly contacted KuCoin for comment, and was told it was “pretty sure” it never offered said project marketing or volume-boosting services. Via email, its representatives allegedly suggested the emails the news outlet obtained could’ve come from fraudulent addresses.

Nevertheless, they admitted the allegations would be a problem is correct. An exchange spokesperson was quoted as saying that KuCoin would “definitely take actions to deal with behaviors that violate our company policy,” if the emails came from its staff.

Notably, the allegations come shortly after KuCoin’s KCS token went up over 13%, thanks to the platform’s 2.0 upgrade. Earlier this month, the exchange also added credit card purchases for major cryptocurrencies.

Justin Sun Congratulates CZ on Binance Coin (BNB) Price Setting a New All-Time High

On Saturday (April 20), Justin Sun, the Founder and CEO of TRON Foundation congratulated Changpeng Zhao (aka "CZ"), the CEO of Binance, and the rest of the Binance team on the Binance Coin (BNB) price breaking its previous all-time high (ATH), which had been set in January 2018.

This was the tweet Justin sent out at 08:54 UTC on April 20:

CZ replied with this tweet:

According to CryptoCompare, at 07:05 (UTC), the BNB price reached the new ATH of $25.42, as can be seen in the 24-hour price chart shown below:

BNB - 24 Hour CC Chart - 20 Apr 2019.png

As CryptoGlobe reported on April 18, there have been quite a few catalysts behind the impressive rise in the price of BNB over the past three months, a few of which are listed below:

  • High successful initial exchange offerings since January 28 (BitTorrent, Fetch.AI, Celer Network) via Binance Launchpad.
  • Ever-expanding list of use cases for Binance Coin.
  • Regular quarterly BNB token burns (the 7th one was reported by Binance on April 16).
  • Successful mainnet launch of Binance Chain (on April 18), with the swap from ERC20 BNB tokens (on Ethereum) to BEP2 BNB tokens (on Binance Chain) expected to begin on April 23 at 00:00 (UTC).

With regard to future BNB price catalysts, since Binance seems to be betting its future on Binance Chain, the main ones are probably:

  • a successful token swap process (i.e. from ERC20 BNB to BEP2 BNB);
  • existing projects, such as decentralized social media platform Mithril, announcing their migration to Binance Chain; and
  • new projects deciding to adopt Binance Chain.

Finally, if you are a BNB token holder and you are worried about how to prepare for the mainnet token swap, the best advice comes from Binance:

 

Featured Image Courtesy of Binance