KuCoin, a cryptocurrency exchange, has released information that covers a $10 million airdrop of Bitcoin (BTC) and KuCoin (KCS) token.
This news was brought by the CEO, Johnny Lyu, in a blog post on the exchange’s website on March 27. The announcement was made shortly after the United States Justice Department filed charges against the exchange and two of its founders.
His letter was also a note of gratitude to KuCoin users for their unwavering support and trust, highlighting the recent events that saw longer withdrawal times on March 26-27. He said in appreciation that KuCoin will start a special airdrop event by distributing $10 million KCS and BTC to its users. In three days, fully developed rules regarding the airdrop will be advertised.
This appreciation move happens amidst critical challenges of KuCoin in the legal sphere. The day before the announcement of the airdrop, the Justice Department accused the exchange and its founders of violating the Bank Secrecy Act due to the absence of the Anti-Money Laundering program and a pending trial for running an unlicensed money-transmitting business. At the same time, the Commodity Futures Trading Commission (CFTC) claimed a civil action against KuCoin, accusing it of breaking the Commodity Exchange Act and CFTC rules.
After these allegations, the KuCoin stated to its users that their funds are safe; however, the KCS, the exchange’s native token, fell by 12% in the next 24 hours.
However, airdrops are not problem-free, and one of these problems is the threat of regulatory consequences. The SEC, in its “Framework for ‘Investment Contract’ Analysis of Digital Assets,” stated: Just because digital assets are received for free, for example, being put into an “airdrop,” does not mean the investment of money requirement of the Howey test is not met; therefore, an airdrop can be considered a sale or distribution of securities.
A small Texas-based apparel company has joined forces with the DeFi Education Fund to petition the court for a declaratory judgment against the SEC in a bid to halt the commission from filing a lawsuit against the company for an airdrop.