Key Takeaways:
- KuCoin exchange faced a stablecoin outflow.
- Alameda is one of KuCoin's market-makers. Could it drag down the exchange?
- Another Terra-like implosion underway?
YEREVAN (CoinChapter.com) – KuCoin, a crypto exchange with a daily trading volume of approximately $740 million, saw a massive fund outflow, along with another crypto exchange, FTX. @WuBlockchain, a China-based crypto analyst with a substantial following, reported the news on Nov 7, noting that Alameda Research might be behind the withdrawal.
KuCoin and Alameda Research
There has also been a massive outflow of Kucoin, and one view is that Alameda, acting as a market maker for Kucoin, is withdrawing funds from it.
said Wu.
The analyst also provided a screenshot of the balance change to support his claim.
Moreover, according to the screenshot above, FTX exchange and KuCoin take the first two places for withdrawals. The aggregate withdrawals from FTX stood at $292.20 million, while KuCoin recorded total withdrawals of $289.66 million.
Meanwhile, the mentioned tweet came as a part of a larger investigation concerning trading company Alameda Research, FTX’s sister company, which is a market maker for the KuCoin exchange.
FTX Controversy Concerns Traders
As CoinChapter reported earlier, on Nov 2, private financial documents surfaced, exposing the “unusually close” ties between FTX and Alameda Research. Both companies are founded by the current FTX CEO, Sam Bankman-Fried.
The report shows that Alameda’s asset foundation largely consists of FTT, the in-house token of FTX exchange. While the situation is not illegal, it raised concerns among traders. In addition, Alameda and FTX’s dependency brought on parallels with Celsius, the infamously insolvent crypto lender.
Binance chief Changpeng Zhao also announced the exchange’s intention to eliminate all its FTT holdings. The news could exacerbate selloff fears, as traders have a low tolerance for platforms plagued with liquidity issues since the Terra implosion.
@WuBlockchain also traced Alameda wallets to show the fund outflow from several exchanges to back FTX withdrawals.
What will happen to KuCoin Exchange?
The tweet sparked a debate about Sam Bankman-Fried’s prior assertions that FTX and Alameda are separate entities.
Thus, KuCoin, an exchange that sources liquidity from Alameda, could sink if FTX faces insolvency issues. In addition, CoinChapter previously reported that DeFi platform implosions and unmet margin calls could ruin the market due to high interconnectivity among digital asset lenders.
As a result, troubles on one end of the market send ripples across the board, causing a ‘contagion.’
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