The rumors came from a now-deleted Twitter account called Otteroooo, who claimed to have insider information about the exchange's ongoing problems.
Otteroooo functions more like a whistleblower, alerting consumers to problems in the Centralized Finance (CeFi) ecosystem. It had a large following until it deactivated the account.
According to the KuCoin whistleblower, the exchange does not have a liquidity problem that it may use to process customer redemptions due to its exposure to the Terraform Labs ecosystem tokens LUNC and wLUNC.
Lyu explained in a blog post with documentation of talks between himself and Otteroooo that KuCoin's only exposure to the LUNA ecosystem tokens is because it supports the trading of those coins.
“It is our job to keep them secure and ensure that users can withdraw in whole at any time.” “Having a LUNC wallet does not always imply that KuCoin as a corporation is holding a large number of LUNC tokens, and I'm sure the difference is clear,” the blog post added.
After Celsius Network, Voyager Digital, Babel Finance, and others shut down withdrawals, locking billions of dollars in client funds, the digital currency ecosystem has become extremely sensitive to news of collapse. As a trading platform, KuCoin is certain to have many more user cash as deposits, and investors will wish to avoid being cut off from their funds.
While the FUD also indicated that KuCoin's latest $10 million strategic investment from Susquehanna International Group was an attempt by the trading platform to cover its bases, Lyu has reaffirmed that there is no link between the cash gained and the trading company's insolvency issues.
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