KuCoin Says It Has No Exposure to wLUNA Tokens

The crypto exchange's CEO, Johnny Lyu, calls the rumors "quite disturbing."

AccessTimeIconJul 27, 2022 at 2:44 p.m. UTC
Updated May 11, 2023 at 5:40 p.m. UTC

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 wrapped luna (wLUNA) in its wallet addresses and suffered losses as LUNA prices fell 99.7%. The once-popular otteroooo account has since shut down.

  • U.S. Spot Bitcoin ETF Flows Drop in Q2: Kaiko
    00:47
    U.S. Spot Bitcoin ETF Flows Drop in Q2: Kaiko
  • What's the Biggest Problem With Play-to-Earn Model?
    00:47
    What's the Biggest Problem With Play-to-Earn Model?
  • How Tap-To-Earn Is Advancing Web3 Gaming
    13:06
    How Tap-To-Earn Is Advancing Web3 Gaming
  • What Cooling Inflation Means for the Crypto Market
    10:05
    What Cooling Inflation Means for the Crypto Market
  • Otteroooo claimed that KuCoin held wLuna, even though the exchange didn't offer deposit or withdrawal services for those tokens to its users. That, according to otterooo, meant KuCoin took on massive losses as it held a token that greatly lost its value.

    In a blog post earlier this week, however, KuCoin CEO Johnny Lyu said that the exchange supported ERC-20 LUNA before and that the service was suspended in May. Lyu explained that the exchange offered wLuna to users during a time period between January 2021 and May, 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 fundraising round 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 a result, KuCoin launched an “Anti-FUD Fund” on Tuesday as an educational initiative to provide accurate information to community members and crypto users and to take legal action against those who start rumors. (FUD stands for fear, uncertainty and doubt.)

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Shaurya Malwa

    Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.