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.

Top Cryptocurrency Coin Mixer Seized; Grayscale Investments 'Big News' Today; More Records for CME's Bitcoin Futures

Major crypto headlines from the past 24 hours: European authorities enforce a world-first seizure of a leading cryptocurrency coin mixer; New York-headquartered Grayscale Investment set to drop "big news" today; and the all-time highs continue for CME Group's bitcoin futures contracts.

The cryptocurrency market has endured some significant selling over the past day. At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,588.2 and $234.5; a 4.3% and 8.6% decline over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,594.3 (-2.2%).

‘First Law Enforcement Action of its Kind’ Sees Top Crypto Coin Mixer Shutdown

The Dutch Financial Criminal Investigative Service (FIOD) – with the assistance of Europol and Luxembourg authorities – announced the seizure and closure of one of the three largest cryptocurrency mixer services in the world, Bestmixer.io.

This marked the “first law enforcement action of its kind against” a cryptocurrency mixer service, according to a press release from Europol. “A cryptocurrency tumbler or cryptocurrency mixing service is a service offered to mix potentially identifiable or ‘tainted’ cryptocurrency funds with others, so as to obscure the trail back to the fund’s original source,” the statement explained.

Despite the apparent victory for law enforcement, “authorities will come to regret the chain reaction that they are starting here,” according to Cornell associate professor of computer science, Emin Gün Sirer. Explaining his rational, Sirer tweeted “this kind of shutdown creates selective pressure for tumblers that cannot be shutdown. And we know, from the research world, that it’s possible to build much better ones.”

CEO of Cryptoasset Investment Giant Teases ‘Big News’ Today

Grayscale Investments – one of the world’s leading cryptoasset management firms – will be dropping some “big news” at 13:00 (UTC), its founder and chief executive Barry Silbert teased on Twitter.

Grayscale - a Digital Currency Group subsidiary - has been noticeably active on the publicity front in recent times. On May 1, it launched the largest mass media campaign the industry has ever seen and, in the time since, Silbert has been doing the rounds on the media circuit, appearing for interviews on the likes of Bloomberg, FOX Business, and Yahoo Finance.

Records Continue for CME Group’s Bitcoin Futures

CME Group – a world-leading derivatives marketplaces that also offers bitcoin futures contracts – revealed “May is shaping up to be the strongest month ever for CME Bitcoin Futures” in a client email sent on Tuesday.

According to the Chicago-based CME Group, they facilitated the trading of a staggering 33,677 bitcoin futures contracts on May 13; a new daily record. In U.S. dollar terms, this roughly equates to $1.3 billion. The firm also told clients the number of accounts trading its bitcoin futures contracts has risen to over 2,500 – also a new record high.