Despite facing legal action against its founders and experiencing a significant increase in withdrawals, CryptoQuant CEO Ki Young Ju asserts there's no need for excessive worry regarding KuCoin's situation.

Ki Young Ju, founder and CEO of CryptoQuant, has declared Seychelles-based crypto exchange KuCoin as "stable" despite criminal accusations and growing apprehensions among its user base regarding its reserves.

In a statement posted on X, Ki Young Ju noted a substantial rise in BTC and ETH withdrawals, primarily from retail users, but mentioned that this had only a minor impact on the exchange's overall reserves.

According to Ju, KuCoin seems to maintain separate customer funds and possesses enough reserves to fulfill user withdrawal requests, thus indicating stability from an on-chain perspective.

KuCoin's total portfolio balance across various chains is reported to be $4.889 billion, according to Scopescan data.

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Cryptocurrency exchange KuCoin reserves. Source: Ki Young Ju/X

On March 26, the U.S. Department of Justice accused KuCoin founders Chun Gan and Ke Tang of deliberately neglecting to implement an Anti-Money Laundering program and alleged the exchange's involvement in money laundering and terrorist financing activities.

Ki Young Ju compared KuCoin's reserve practices favorably with those of the now-defunct crypto exchange FTX, highlighting that KuCoin seems to have maintained segregation between customer funds and its own reserves.

The withdrawal of funds from crypto exchanges is a common reaction among investors when legal concerns or doubts about an exchange's reserve status arise. This was evidenced by the rush of users withdrawing billions of dollars from FTX following a tweet by former Binance CEO Changpeng "CZ" Zhao announcing the disposal of all Binance's holdings in FTX's native FTT token.

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Cryptocurrency exchange FTX reserves. Source: X/Ki Young Ju

The apprehensions surrounding KuCoin's reserves, or those of any major exchange, extend beyond just its user base, as such concerns can trigger broader market panic. For instance, following news of FTX's demise, Bitcoin's price plummeted by over 20% within the week.

Nevertheless, despite the legal challenges faced by KuCoin's founders, the market sentiment appears largely unfazed, as indicated by the Crypto Fear and Greed Index, which currently stands at an extreme greed level of 83.