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 Jul 27, 2022 at 3:14 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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.

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.)

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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