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Tag: kucoin

  • Is KuCoin safe from the collapse of FTX?

    Is KuCoin safe from the collapse of FTX?

    KuCoin is a cryptocurrency exchange launched on 15th September 2017 and has over 20 million users worldwide. The recent bankruptcy of the FTX Group and “hack” however have resulted in a “contagion effect” resulting in speculation as to which other crypto companies might collapse. In this article, we answer the question- is KuCoin safe from the collapse of FTX.

    What is KuCoin?

    KuCoin is a centralized cryptocurrency exchange, meaning that users’ cryptocurrency deposits are stored and held in custody by the exchange. KuCoin refers to itself as “The People’s Exchange” and is headquartered in Seychelles. The exchange has over 20 million users worldwide and 660 million US dollars in trading volume daily. This certainly puts them in the top 10 most popular exchanges in the market.

    How might the collapse of FTX affect KuCoin?

    On 11th November 2022, FTX, FTX US, and Alameda filed for bankruptcy in the United States. This came after several days of withdrawals being suspended on the exchanges and rumours already circulating that they were in trouble. On the same day, it was reported that over US$600 million were drained from FTX by a hacker. This hacker was eventually identified to be a former employee of FTX exchange. It was also revealed that one of the reasons for FTX’s collapse was because Alameda Research, which was FTX’s trading house, had burned through nearly US$10 billion in cash belonging to its clients.

    The collapse of FTX has brought the safety of all centralized cryptocurrency exchanges to the forefront. This is especially since FTX was one of, if not, the largest cryptocurrency exchanges. The revelations that FTX had been wrongfully handling client funds have also sent fear amongst cryptocurrency traders.

    As a result, in the days leading up to the announcement of FTX’s bankruptcy filing, cryptocurrency traders were rushing to withdraw their funds stored on exchanges. There were rumours circulating as to which crypto companies had funds on FTX. And, if so, how much and whether they would be affected by the collapse of FTX. Meanwhile, some cryptocurrency services such as BlockFi have also suspended withdrawals and are rumoured to be filing for bankruptcy. Of course, being a major exchange, KuCoin was also subject to rumours and questions about its solvency and whether they are safe from the FTX contagion.

    KuCoin addresses rumours of outflows following FTX collapse

    On 9th November 2022, KuCoin’s CEO Johnny Lyu wrote a letter addressing the FUD (Fear, Uncertainty and Doubt) surrounding the exchange. The rumour surrounding KuCoin originated from a stablecoin outflow chart by Nansen, a blockchain analytics firm. The flowchart showed that US$300 million had left the exchange. However, it was quickly clarified by Nansen CEO Alex Svanevik that the US$300 million was merely a swap from USDT network to Tron. Therefore, the funds had in fact not left KuCoin exchange.

    Nansen clarifies the alleged outflow of US$300 million from KuCoin

    In the letter, KuCoin also notes that it was probably the 10th time in 6 months that there are circulating rumours on Twitter that KuCoin is insolvent. It is also admitted that KuCoin did suffer a hack in 2020 with over US$275 million worth of cryptocurrencies, resulting in a liquidity crisis. However, KuCoin was able to cover 100% of their users’ funds and so users did not suffer any loss.

    As seen below, KuCoin has also denied having any exposure to FTX or its native FTT token.

    Does KuCoin have any exposure to FTX or FTT?

    Lyu has also clarified on Twitter that KuCoin does not have any exposure on FTX or FTT. This dispelled the speculation by Cobie, host of the UpOnly podcast.

    KuCoin FTX FTT exposure rumour
    Lyu dispels rumours that KuCoin has exposure on FTX or FTT (Source: Twitter)

    Is KuCoin safe?

    As seen above, KuCoin has already expressly denied they have any exposure to or deposited any funds at FTX. To reassure its users, KuCoin has promised to release its Merkle tree proof-of-reserves (POF) in one month.

    Meanwhile, Nansen has listed KuCoin’s portfolios and explanatory statements of accounts here.

    The “total assets” and “net worth” figures in the portfolio show the sum of the cryptocurrencies in the wallet addresses provided by KuCoin. These wallets are continuously monitored by Nansen, although they cannot be taken as a complete statement of the actual assets or reserves held.

    On 11th November 2022, Lyu also provided an overview of their hot and cold addresses and holdings. KuCoin’s holdings as of 7:00 UTC on 11th November 2022 comprised of 20,504 BTC, 180,299 ETH, 1,075,909,241 USDT, 365,722,839 USDC, and 69,601,075 KCS.

    KuCoin wallet holdings

    As mentioned, KuCoin is working on the Merkle-tree proof-of-reserves. The exchange is also expecting the completion of an audit by third-party auditor Aarmanio LPP. Both are expected to be completed in a month’s time i.e. in around early December 2022.

    Therefore, it seems that KuCoin exchange is safe from the FTX collapse for now. However, users are still recommended to keep their funds off of any exchanges. Instead, users should consider storing their cryptocurrencies in hardware wallets as it means the cryptocurrencies are in their own custody. Check out our reviews for some popular hardware wallets:

  • KuCoin vs Kraken Comparison Review: Which Exchange is Better?

    KuCoin vs Kraken Comparison Review: Which Exchange is Better?

    Choosing the right cryptocurrency exchange is crucial to optimizing your crypto investments and trading. In this article, we will be comparing two of the top crypto exchanges in the world: KuCoin and Kraken.

    What is KuCoin?

    Company Overview

    Since its launch in 2017, KuCoin has grown to be one of the largest exchanges by trade volume worldwide, with over $1 trillion accumulated trading volume. 11 million people from more than 200 countries are registered on the platform. Known as the “People’s Exchange”, KuCoin puts user experience first, providing users with multi-language and 24/7 customer service. As such, KuCoin has established local communities all around the world including Japan, Italy, Russia, and India, just to name a few.

    Trading Bot Feature

    While KuCoin provides advanced trading tools for experienced users, its platform also benefits beginners in the trading scene. In fact, KuCoin offers trading bots in which users can enter specific trading parameters and let the bot take over trading activities. As a result, traders of all levels do not have to go through the hassle of timing entries and exits. It is a passive approach to trading cryptocurrency and maximizing potential profit. The best part is that traders do not have to monitor the market constantly, knowing that their crypto trading portfolio is working for them.

    Top Altcoin Exchange

    KuCoin has one of the largest selection of altcoins available compared to other major exchanges. There are currently over 700 tokens with new ones being added regularly. Even crypto users from Binance or FTX will often keep KuCoin as a secondary exchange to acquire new altcoins that cannot be found anywhere else.

    The platform also offers fiat support for over 50 different currencies. As a result, users from remote locations have access to swapping tokens while avoiding high conversion rates.

    What is Kraken?

    Company Overview

    Founded in 2011, Kraken is one of the oldest and most reputable U.S. crypto exchanges. It is the global leader in Bitcoin trading in terms of the volume of transactions in euro and its liquidity. Trades also support Candian dollars, U.S. dollars, British pounds, Australian dollar, Swiss franc, and Japanese Yen. As a result, there are 9 million registered users across 190 countries, with $207 billion quarterly trading volume at the time of writing.

    In 2015, Kraken opened the first dark pool for Bitcoin, resulting in the trading platform becoming a primary place for institutional investors and high-volume whales to trade Bitcoin in discretion.

    Who Founded Kraken?

    Kraken was founded by Jesse Powell (CEO) who was a security consultant for Mt. Gox. Powell anticipated the fall of Mt. Gox and began developing Kraken as a potential replacement. According to Powell, he realized that “the exchange is the most critical part of the Bitcoin ecosystem” after learning the situation with Mt. Gox. When it indeed collapsed and failed security audits in 2014, it paved the way for newer and more robust exchanges like Kraken to gain market share.

    Key Features of Kraken

    Though Kraken only offers 185 coins which is fewer compared to other major exchanges, Kraken allows users to stake popular cryptos and earn attractive APY rewards as high as 23% in yearly rewards. To this day, over $10 billion worth of digital assets are staked on Kraken’s on-chain staking platform, rewarding more than $100 million to clients.

    Kraken was also one of the first exchanges to offer spot trading with margin, regulated derivatives and index services. Similar to Coinbase, Kraken also has two apps: Kraken and Kraken Pro. The latter is designed for traders on the go and provides an interface for advanced trading, charting, and order types that are not available on the standard app. Advanced traders can easily trade large volumes at stable prices with low spreads and high rate limits.

    Kraken is also active in providing in-dept crypto education. Similar to Binance Academy, Kraken has Kraken Learn that are full of articles, videos, and guides that users need to navigate the crypto world. Crypto is still a relatively niche market. As such, this is an important step to mass adoption as education is the key to onboard newcomers.

    KuCoin vs Kraken Overview

    In this section, we will take a closer look at what KuCoin and Kraken have to offer and compare them based on these features:

    Cryptocurrencies and Products

    KuCoin offers more cryptocurrencies than Kraken by a large margin. It prides itself in being the top major crypto exchange that is constantly up to date with the latest digital assets. KuCoin offers more than 700 supported coins, whereas Kraken only has over 185. However, Kraken focuses on providing large volume to its smaller number of cryptos, which is better for trading in general as users can easily trade large volumes at stable prices. If you opt for high risk, high reward investments, KuCoin is the pick. But if you prefer trading large-cap cryptos at a regular basis, Kraken is the better option.

    Kraken also offers higher returns on crypto staking and savings. Take Bitcoin for example, Kraken offers a 1% APR, whereas KuCoin only gives 0.12%. However, Kraken’s Bitcoin staking is done off-chain via their internal programs, which is available in eligible countries only. Nevertheless, though both numbers are small, the difference becomes more significant over time.

    Both KuCoin and Kraken offer a wide array of trading tools for advanced users. But KuCoin also provides a trading bot for users to earn passive profits without constantly monitoring the market. In terms of convenience, KuCoin is the winner here as traders of all levels can simply let the bot do the trading around the clock. After all, humans cannot compete with bots in terms of speed and calculation. According to their website, KuCoin has over 9 million bots created worldwide.

    Fees

    Kraken has a more complex fee structure than KuCoin. Fees are incurred across multiple purchase categories such as (1) Kraken Instant Buy, (2) Kraken Pro, (3) Stablecoins/Pegged Token/FX Pairs, (4) Margin, (5) Futures, and (6) NFTs. On the other hand, KuCoin only has differing fees for spot and futures.

    Both exchanges charge no fees for crypto deposits, though Kraken charges an address setup fee for certain assets. In terms of trading fees, KuCoin’s maker and taker fee is between 0.01-0.1%, whereas Kraken’s maker and taker fee is between 0.00% and 0.26%. KuCoin lowers trading fees based on the amount of KCS (KuCoin Shares) the user is holding, whereas Kraken gives discounts based on monthly trading volume.

    For most retail investors, KuCoin is the clear winner as the benefit of holding KCS is twofold: lowering trading fees and appreciation of KCS value over time. However, for whales who trade large volumes regularly, Kraken is the better option.

    Security

    Like Coinbase, Kraken is one of the few registered and licensed crypto exchange in the U.S. where it has one of the strictest crypto regulations in the world. The exchange ranks first with a perfect score on crypto exchange security review site CER, and it has never been hacked before.

    On the other hand, though KuCoin shares most of the security features as Kraken including KYC verification and multi-factor authentication, KuCoin has suffered a major breach in 2020. The hackers managed to obtain the keys to some of the biggest wallets on the exchange, stealing over $281 million worth of coins. Although $204 million were recovered within weeks of the attack, a lot of users in the crypto space had lost faith in KuCoin. However, since the incident, the exchange has been actively upgrading their security mechanisms and performing periodic reviews to protect users’ privacy and assets.

    Key Takeaways

    If you prefer spot trading and investing in high risk, high reward altcoins, KuCoin is the better choice.

    If you want to trade without going through the hassle of monitoring the market constantly, KuCoin is also better as they have a trading bot who can help you trade within specific parameters you set up.

    If you are an advanced trader or a whale, Kraken is far superior than KuCoin as they have an app (Kraken Pro) specifically designed for high-level trading and deep liquidity to support large volume trades with low fees.

    If you value security first, Kraken is the clear winner as they have never been hacked before, and is one of the few exchanges that operates under U.S. regulations.