Crypto Twitter has been abuzz with rumors about the KuCoin exchange facing insolvency. These rumors have affected the price of KuCoin’s native token, KCS, which is down 15.6% over the last week.
The market is reacting to these rumors due to the recent events in the market. Several cryptocurrency exchanges like Celsius, Vauld, and BlockFi have stopped withdrawals due to current market conditions.
KuCoin Insolvency Rumors
KuCoin is the fifth largest cryptocurrency exchange in the world by trading volume. Data from CoinGecko shows that the KCS token ranks as the 53rd largest cryptocurrency, with a market capitalization of $876 million at the time of writing.
The KCS token faltered due to rumors on Twitter that KuCoin was on the verge of insolvency. Twitter reports claimed that the exchange was exposed to the collapse of Terra LUNA, Three Arrows Capital, and Babel Finance. However, KuCoin CEO Johnny Lyu has dismissed these claims.
Lu said that these rumors were simply spreading FUD about the exchange, adding that he was unclear on the intentions of the people behind the rumours. She assured users that the exchange was operating normally and even threatened to take legal action against those who spread these baseless rumors.
The collapse of several crypto companies
Current market conditions have put pressure on companies that did not have a solid financial foundation. The collapse of the Terra LUNA network was one of the first factors that triggered the insolvency of companies like Three Arrows Capital that were exposed to the collapsed LUNA token.
Interestingly, the insolvency of various platforms began as rumors on Twitter. For example, before Celsius Network halted trades, withdrawals, and transfers, there were rumors from Twitter users that the DeFi platform was underwater. These claims were strongly denied by Celsius’s CEO. A few days later, the platform stopped the services citing extreme market conditions. Celsius is reportedly in the process of filing for bankruptcy.
Some crypto companies have struggled to maintain liquidity due to the ongoing bear market. Some of the largest exchanges, such as Coinbase, Gemini, and Crypto.com, have announced plans to lay off staff and freeze hiring due to the bear market. The KuCoin CEO has maintained that the company’s financial position was still strong, adding that it was among the few companies still hiring.