KuCoin is trying to keep its customers on board in the face of legal challenges from multiple regulatory agencies by launching a $10 million crypto drop.
KuCoin Working On Confidence Retention
Crypto exchange KuCoin has announced an initiative under which it will be airdropping $10 million worth of BTC and KCS to its users as a token of appreciation for their continued patronage, amidst the legal troubles the exchange is facing.
The initiative was announced via an open letter penned by KuCoin CEO, Johnny Lyu soon after the Department of Justice alleged that the exchange had violated the Bank Secrecy Act by operating as an unlicensed money-transmitting business. KuCoin has also been recently slapped with a civil case by the CFTC for allegedly violating the Commodity Exchange Act.
Legal Cases Takes Toll
As a result of these two significant legal cases against it, KuCoin’s assets under management witnessed a 20% drop with over $1 billion of crypto being withdrawn from the exchange. The upcoming $100 million crypto airdrop is an attempt on the part of the exchange to boost user confidence
According to Lyu, the company has faced severe challenges in its seven years of operation. Despite the challenges, Lyu claimed that KuCoin had adhered to its commitment to user value and the development of the crypto sector.
CEO’s $10M Apology
Lyu wrote about the company’s proactive compensation initiative called “People’s Exchange,” under which KuCoin acquired and compensated large amounts to users in the case of abnormal delisting.
He addressed the longer waiting times as experienced by some users trying to withdraw their funds on March 26th and 27th and apologized for the inconvenience.
He wrote,
“To express our profound gratitude for your support and patience, KuCoin will launch a special airdrop event totaling 10 million USD in KCS and BTC. We hope that through this initiative, we can express our gratitude for the support of our loyal users. Thank you for your understanding and support. KuCoin will continue to strive for higher quality and safer services, growing together with you.”
Risks Of Airdrop
Although airdrops are popular in the crypto community, they come with regulatory risks. The SEC's "Framework for 'investment contract' Analysis of Digital Assets" suggests that airdrops could still be considered investments under the Howey test, potentially subjecting them to securities laws. This adds complexity to KuCoin's challenges.
The rules of the airdrop will be announced in the next three days, while users were also warned to keep an eye out for any possible scams.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
