Crypto exchange KuCoin has denied having exposure to luna tokens amid chatter the company was facing possible insolvency after the Terra ecosystem’s collapse in mid-May.
Rumors of trouble at KuCoin are thanks to “otteroooo,” a crypto-related Twitter account that last week alleged the exchange held large quantities of weighted luna (wLUNA) on its wallet addresses and suffered losses as LUNA prices fell some 99.7%. It’s notable that the once-popular otteroooo account has since shut down.
Otteroooo claimed that KuCoin held wLuna even as the exchange did not offer deposit or withdrawal services for those tokens to its users. This, as per otterooo, meant KuCoin took on massive losses as it held a token that greatly lost its value, and hence took on massive losses.
However, in a blog post earlier this week, KuCoin CEO Johnny Lyu said that wLuna ERC-20 LUNA was supported in January 2021, and that the service was suspended in May 2022. Lyu explained that the exchange offered wLuna to users during that time period, but swapped the tokens after the old luna tokens ceased to exist – thus providing a rationale for its wLuna holdings at the time.
“Most funds in KuCoin wallets do not belong to KuCoin; they belong to our users,” Lyu continued. “Having a LUNC wallet does not necessarily mean KuCoin as a company is holding lots of LUNC tokens, and I’m sure the difference is obvious.”
Lyu further stated that KuCoin’s recent $150 million fundraise had nothing to do with Luna nor was it about the need for capital to pay off depositors.
Speaking to CoinDesk, Lyu said it was “quite disturbing” to see that a large part of the crypto community took the rumors being circulated on Twitter seriously. “Builders in the industry do not want to see such an event happen,” Lyu said, adding that the current market situation “incited suspicion and we understand those prone to it.”
As such, KuCoin launched an “Anti-FUD Fund” on Tuesday as an educational initiative to provide accurate information for community members and crypto users, and even take legal action against those who start rumors.
