The news broke out on Thursday that the KuCoin cryptocurrency exchange is facing a regulatory inspection following its skyrocketing earnings on various crypto yield products.
KuCoin registered a gain of 233.15% on its Ethereum yield, 253.28% on Bitcoin products, and a 100% gain on its Tether deposits.
Whereas the company said that Tether (USDT) prices seem to be part of a promotion, the gains on Ether (ETH) and Bitcoin (BTC) are part of the company’s smart and timely dual investment decision.
KuCoin Raised Many Eyebrows with Its Staggering Numbers
On Wednesday, the KuCoin exchange’s 24-hour trade volume was $640, just after 24 hours by the end of Thursday, the trade volume reached up to $862 million.
This massive increase in the trade volume has grabbed the interest of regulatory authorities, as they will look for financial irregularities.
Thanks to these massive gains in crypto products, KuCoin now has become the world’s fifth-biggest centralized cryptocurrency exchange in terms of market cap, claimed by CoinGecko.
This massive news has also taken social media users by storm.
Dual Investments in Crypto
It is important to understand to investors and traders that dual investment is like any financial product.
Dual investment products also known as crypto derivatives is a simple business strategy that allows user to deposit money in one cryptocurrency and withdraw the money in another currency.
For instance, an investor deposits Ether (ETH) and withdraws Bitcoin (BTC), and makes the money.
The reason is that derivatives are among the most popular trend to earn the money. Derivatives offer high yields because it carries even greater risk.
The reason majority of the crypto analysts and investors seem critical of derivative trading is that it’s a non-protected product.
So, derivatives only offer two outcomes, either earn a massive amount or end up being lousy. That’s why the majority of cryptocurrency investors like to receive less but sustained profits rather than taking a huge risk.
Investors’ Sentiment Regarding KuCoin’s Sky-Rocketing Gains
Many users and investors responded that this was an attempt from the exchange to secure more of the investors’ money, which was being executed at the perfect time.
The thinking behind such execution of derivatives trading was to provide the KuCoin with enough market capital to survive the current volatile market period.
Following the FTX collapse, KuCoin’s CEO Johnny Lyu said that the crypto exchange has always been truthful to customers and that protecting their money is the utmost priority.
These incredibly high levels of earnings are the reason that investment in crypto dual products is called a “Ponzi scheme.”
However, as long as crypto exchanges will continues to bring more and more investors the derivatives trade will keep going stronger.
Even though KuCoin has released the data showing the balance of some of its wallets, along with their addresses.
But as of now, they are unable to provide any third-party audit report, making them more suspicious.
The company officials said that the primary reason they have not been able to provide the audit report was the busy schedule.
KuCoin’s main account almost spent the entire day addressing the customers’ queries that they could not withdraw their funds. However, this technical issue was resolved on time.
Future of KuCoin
It seems that KuCoin has successfully executed what has failed FTX. Given the fact that KuCoin has now become the world’s fifth-biggest cryptocurrency exchange, chances are high that more investors will use this platform for trading.
This can further enhance the trade volume on the exchange. The company has generated over 50% of its revenues through derivatives.
As of now, KuCoin seems stable against the crypto market’s price hikes and company trade volume is overwhelmingly huge.
Market experts believe that KuCoin’s current market position makes it an extremely secure cryptocurrency exchange that simplifies cryptocurrency buying and selling and storing cryptocurrencies like Bitcoin (BTC), Ether (ETH), ADA, and SOL in customers’ wallets.