A recent analysis from CryptoQuant revealed that KuCoin, a cryptocurrency exchange that has faced numerous challenges over the past few years, has seen a staggering loss of over 14,000 BTC from its reserves following the introduction of mandatory Know Your Customer (KYC) requirements for all users.
In stark contrast, Binance continues to flourish, establishing itself as the dominant force in the cryptocurrency market in terms of Bitcoin (BTC) reserves.
77.6% Decline in BTC Reserves
This significant drop in KuCoin’s BTC reserves can be traced back to a strategic pivot that was officially announced in June 2023. Following mounting rumors earlier that month, KuCoin mandated all users to complete KYC procedures, effectively altering the landscape of their customer engagement and compliance practices.
According to the CryptoQuant OnChainSchool analyst, this decision marked the beginning of a visible downtrend in KuCoin’s Bitcoin holdings. Specifically, the report indicated that BTC held on the platform plummeted from approximately 18,300 BTC in early June 2023 to a mere 4,100 BTC today—a net outflow of 14,200 bitcoins, representing a 77.6% decline in less than two years.
While there is a broader trend indicating a decline in the amount of BTC stored across various exchanges, the situation faced by KuCoin stands out as particularly extreme.
“The timing and magnitude of this inflow strongly correlate with the enforcement of KYC,” concluded the analyst.
In addition to these challenges, 2023 saw reports of substantial layoffs within the company, further exacerbating the situation. Coupled with regulatory scrutiny in the United States, including high-profile settlements, KuCoin’s struggle to retain its user base and build trust is evident.
Binance Dominance Rises
While it is true that many investors are withdrawing BTC from exchanges, one trading venue is experiencing a dramatic increase in market share—Binance. Despite facing controversies, including a multi-billion dollar settlement with the Department of Justice and the departure of its CEO, Binance has not only maintained its footing but has seen an increase in its Bitcoin reserves.
Since the onset of the COVID-19 pandemic, Binance’s share of BTC reserves has consistently grown. Currently, the exchange holds approximately 23% of all BTC reserves stored on centralized exchanges.
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