KuCoin faced backlash from users after becoming FIU-compliant in India and re-entering the Indian crypto market due to concerns about the sharing of user data with the Government of India.

Following its successful FIU registration in India, KuCoin, a well-known crypto exchange, was accused of compromising user privacy, leading to the issuance of a statement to address user doubts. KuCoin tackled the rumors surrounding the sharing of user data with the Indian government in order to obtain FIU registration.

Dealing with User Concerns

The controversy arose when KuCoin announced its re-entry into the Indian market, highlighting its compliance with India's FIU. Additionally, the exchange took to X and announced that its trading app is now accessible on the Google Play Store and Apple App Store in India. In response to the announcement, a user questioned if past user data was shared with the GOI for FIU registration.

A moderator from KuCoin responded by emphasizing the security of users' assets and privacy. To alleviate concerns about data sharing, KuCoin reassured users that it operates as an offshore global exchange that adheres to legal requirements.

Furthermore, KuCoin reiterated its commitment to collaborating with judicial evidence collection in line with international procedures and relevant laws. The statement emphasized the exchange's adherence to stringent international standards and requirements.

In the midst of increased scrutiny on CEXs globally and regulatory focus on compliance and data privacy, KuCoin's reassurance is crucial. With India clamping down on crypto and potential data sharing exacerbating the situation, speculations like these are valid.

Though KuCoin's response may calm some concerns, the reaction from users and regulators in the following days remains uncertain. Furthermore, the exchange's failure to provide a definitive answer is disappointing for users.

Challenges in the US After DoJ Allegations

While KuCoin celebrated its success in the Indian market, it faced heightened scrutiny in the US following allegations from the Department of Justice. In March, KuCoin's Bitcoin reserves saw a significant drop of over 25% compared to the previous month. This decline is attributed to the legal scrutiny it is currently facing.

The exchange's most recent asset reserves reveal a decrease in BTC holdings from 16,240 BTC in February to 12,114 BTC, marking a 25.4% decline. Similarly, Ethereum assets dropped to 112,763 ETH, a 21.91% decrease from February's 114,405 ETH.

Additionally, USDT reserves took a hit, declining by 21.5% to 963 million. The USDC reserve also experienced a sharp decline of 33.62%, falling to 39.34 million. Facing accusations from the DoJ and a lawsuit from the CFTC related to Ethereum margin trading activities, KuCoin is in troubled waters.

The charges against the exchange, along with its co-founders, Chun Gan and Ke Tang, allege violations of anti-money laundering regulations and the Bank Secrecy Act.

The allegations suggest that KuCoin, Gan, and Tang were engaged in operating an unlicensed money-transmitting business and conspiring to breach financial regulations. Despite its rapid growth initially, KuCoin is now witnessing a significant exodus of traders from its platform.