Crypto Twitter has been filled with rumors about the KuCoin exchange facing insolvency. These rumors have affected the price of KuCoin’s native token, KCS, which has been down by 15.6% during the past week.
The market is reacting to these rumors because of the recent events in the market. Several cryptocurrency exchanges such as Celsius, Vauld, and BlockFi have halted withdrawals because of the ongoing market conditions.
Rumors of KuCoin’s insolvency
KuCoin is the fifth-largest cryptocurrency exchange globally by trading volumes. 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 has been wobbling because of the rumors on Twitter claiming that KuCoin was on the verge of insolvency. Twitter reports claimed that the exchange was exposed to the collapsed Terra LUNA, Three Arrows Capital, and Babel Finance. However, the CEO of KuCoin, Johnny Lyu, has dismissed these claims.
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Lu said that these rumors were simply spreading FUD about the exchange, adding that he was unclear of the intentions of the people behind the rumors. He assured users that the exchange was operating normally and even threatened to take legal action against those spreading these unfounded rumors.
The collapse of several crypto firms
The current market conditions have exerted pressure on firms that did not have a strong financial footing. The collapse of the Terra LUNA network was among the first factors triggering the insolvency of firms such as Three Arrows Capital that were exposed to the crashed LUNA token.
Interestingly, the insolvency of several platforms started as rumors on Twitter. For instance, before the Celsius Network halted swaps, withdrawals, and transfers, there were rumors from Twitter users that the DeFi platform was under water. These claims were strongly denied by the CEO of Celsius. A few days later, the platform halted services citing extreme market conditions. Celsius is reportedly in the process of filing for bankruptcy.
Some cryptocurrency firms have been straining to sustain liquidity because of 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 because of the bear market. The CEO of KuCoin has maintained that the company’s financial position was still strong, adding that it was among the few firms still hiring.
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