KuCoin manipulated the UST market to earn $33M, according to this investor

An investor has accused KuCoin of manipulating the UST market to earn $33M. Credit: KuCoin via Twitter

YEREVAN (CoinChapter.com) – One investor, who was among those that lost large sums when the Terra ecosystem crashed, has now made serious allegations against crypto exchange KuCoin.

According to the investor, the exchange took advantage of the situation and manipulated the UST market to earn more than $33 million. As a result, many of its customers have lost millions.

The individual, who goes by the pseudonym CryptoHodl, claims he lost $540,184 because of KuCoin’s market manipulation.

What did the exchange do wrong?

In a details Reddit post, the investor narrates the events that led to the loss of his funds. After noticing Anchor Protocol investors withdrawing their funds, he decided to do the same. So he withdrew 1,949,390UST and deposited them in two Kucoin accounts.

This was when things went downhill. He could not exchange his UST for Tether USDT, despite several attempts. Finally, on May 11, when UST went down to $0.30. KuCoin decided to close UST withdrawals. However, people were welcome to continue making deposits.

The exchange claimed they were facing congestion problems on the blockchain. When UST reached its target price of $0,84 on other exchanges, it remained at $0,59 on KuCoin.

Had it been on any other exchange, he believes he would have successfully sold his UST for $0,84. At a price, he would manage to save at least 1,637,487 USDT from his 1,949,390 UST.

However, when KuCoin finally unlocked UST withdrawals, it was too late. UST had already fallen sharply to $0,65. So he sold his UST for an average price of $0,56. As a result, he suffered a loss of over $540,000.

Did Kucoin make arbitrations for 11 hours?

Meanwhile, the trader accuses KuCoin of making arbitration on the market for 11 hours. This allowed the exchange to cash in on the massive price difference between the value of UST on their platform and other exchanges.

“By locking UST withdrawals, Kucoin created for itself an incredibly profitable situation. Kucoin bought UST 30% below the price on their own platform. And then sold them to the real price, 30% higher, on any other platforms,”
CryptoHodl alleged.

Through such market manipulation, KuCoin allegedly made approximately $33,730,923 of profit. On-chain data also reveals that the exchange made 13 withdrawals when they blocked the service for others.

KuCoin’s terra wallet recorded 13 withdrawals when the network was supposed to be down. Credit: CryptoHodl via Reddit

As they alleged, if there was network congestion, how was KuCoin able to make the withdrawals? Rattled with the attitude of the exchange, the investor plans to connect with other victims to launch a joint fight against it.

KuCoin Token (KCS) on the road to recovery

Meanwhile, KuCoin Token (KCS), the native token of the exchange, seems to be gearing up for recovery. The recent rally saw its price reach $17.66. However, it remains around 40% below its all-time high of $28.80 on Dec.1, 2021.

At writing, KCS exchanged hands for $17.50 per token.

KCS has rallied after the exchange launched a wallet and NFT marketplace. Credit: CoinMarketCap

The recent rally comes just two days after the exchange launched its first-ever decentralized crypto wallet. According to the exchange, the KuCoin Wallet allows users to create a decentralized account for Web 3.0 in seconds. Moreover, they can send, receive, and store several crypto tokens, including BTC, ETH, BNB, etc.

“KuCoin aims to go beyond centralized trading services and enter the decentralized world to extend its business further, with KuCoin Wallet as one of the products in its plan,”
the company said.

Moreover, the exchange announced the launch of the first NFT project in its upcoming marketplace. Windvane, KuCoin’s native NFT marketplace, will launch on June 20, 2022. “Zzoopers” will be its debut NFT project.

Crypto exchange KuCoin is the fifth-largest in the world, with a daily transaction volume of about $1.55 billion, according to CoinGecko. However, while it gears up to make inroads into Web3 integration, allegations of fraud may threaten the reputation.