David Edwards
KuCoin, once a significant player among centralized crypto exchanges, has witnessed a sharp 77.6% decline in its Bitcoin reserves over the past two years, according to a recent CryptoQuant analysis. The primary driver behind this steep drop was the exchange’s enforcement of mandatory Know Your Customer (KYC) procedures in June 2023.
The decision to mandate identity verification for all users was initially surrounded by speculation but was formally implemented at the end of that month. Following this shift, KuCoin’s BTC holdings plummeted from approximately 18,300 BTC in early June 2023 to just 4,100 BTC as of now—a net outflow of 14,200 BTC.
Analysts at CryptoQuant, particularly OnChainSchool, attributed this significant outflow to the KYC enforcement, calling KuCoin’s case “extreme” even in the context of a broader trend of declining exchange reserves.
Beyond the liquidity impact, KuCoin faced mounting operational challenges in 2023, including significant layoffs and regulatory scrutiny in the United States. The exchange settled multiple legal disputes amounting to millions of dollars, further denting investor confidence.
Meanwhile, Binance continues to dominate the centralized exchange landscape despite its own controversies, including a record-breaking Department of Justice settlement and the resignation of its co-founder Changpeng “CZ” Zhao. Nonetheless, Binance’s BTC reserve share has consistently grown since the onset of the COVID-19 pandemic. It now accounts for 23% of all Bitcoin held on centralized platforms, reaffirming its position as the market leader.
While investors are increasingly favoring self-custody, Binance appears to be consolidating trust among those who continue to trade via exchanges—highlighting a stark contrast with KuCoin’s dwindling position.
