Cryptocurrency exchange KuCoin has announced that it will be conducting an airdrop of Bitcoin (BTC) and its native KuCoin (KCS) token, with a total value of $10 million. This announcement comes shortly after the United States Justice Department revealed charges against KuCoin and two of its founders.
In a letter posted on the exchange’s blog on March 27, CEO Johnny Lyu mentioned the airdrop without directly addressing the federal charges. However, he alluded to them by comparing the airdrop to the exchange’s reimbursement of investors who suffered losses in the Confido rug pull.
Lyu stated that the rules for the airdrop will be released in three days. He also acknowledged that the recent delays in withdrawals could be attributed to the high volume of customers abandoning the exchange due to concerns. As a result, the airdrop is intended to reward users who remained loyal during this challenging period.
It is worth noting that the timing of the airdrop is significant, as KuCoin faced a series of legal actions just one day prior. The Justice Department unsealed an indictment against the exchange and its founders for violations of the Bank Secrecy Act, including the absence of an Anti-Money Laundering program and operating an unlicensed money-transmitting business. Additionally, the Commodity Futures Trading Commission (CFTC) initiated a civil case against KuCoin for violations of the Commodity Exchange Act and CFTC regulations.
Despite these charges, KuCoin reassured its users that their assets were secure. However, the exchange’s native token, KCS, experienced a 12% decline within 24 hours.
While airdrops offer benefits to users, they also come with certain risks, including the potential for regulatory actions. The Securities and Exchange Commission (SEC) highlighted these risks in its document titled “Framework for ‘Investment Contract’ Analysis of Digital Assets.”
In a separate development, the DeFi Education Fund collaborated with a small clothing company from Texas that had filed a lawsuit against the SEC, seeking a declaratory judgment to prevent the agency from prosecuting the company for conducting an airdrop.
In unrelated news, a cool green mayor has decided to give $1,000 worth of Bitcoin to each resident as a gesture of goodwill.