Review: KuCoin

Update (10 Nov 2022):  Following the failure of FTX, we are withdrawing all our recommendations in the crypto space. Readers should not rely on anything in the post below. We are leaving the posts up for accountability but striking out all text to avoid any misunderstanding. 

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The  Bottom Line

KuCoin has the 2nd highest number of coin listings of the platforms we tested for Singapore residents and the 2nd lowest fees. Its relatively easy to use, offers gamified rewards for trading and tools like an algorithmic trading bot. It also offers up to 100x leverage for trading futures.

However KuCoin has a relatively short history, does not have any licenses in any country, has shifted its base country a few times and we found very limited information about its founders in our research. It also appears to have been involved in a dispute regarding its domain name in Singapore.

There is very limited disclosure on their safety practices and the exchange was hacked for US$285mm in Sep 2020. The management claims all customers were eventually made whole through recovery and insurance.

* We will not be linking to KuCoin till our concerns outlined in the sections on Licensing and Safety are resolved.

What is KuCoin?

KuCoin is a cryptocurrency exchange based in Seychelles. It ranks in top 10 globally for spot trading volume and claims more than 10 million registered users.

KuCoin offers access to more than 600 coins on its spot platform, much more than most other platforms we reviewed.

KuCoin does not appear to be licensed or regulated / audited by any authority globally. Their name does not appear in MAS’ list of entities that are either exempt from holding a license or that are no longer exempt.

How is KuCoin different from other Crypto Exchanges?

Large number of listings KuCoin lists more than 600 coins on their spot platform and more than 100 on the futures. This is much more than most other established platforms that are available in Singapore. KuCoin was the only exchange to list all Top 10 coins by market value and had 75 of the top 100 and 134 of the top 200 coins listed.

Low fees for crypto pairs KuCoin charges 0.10% fee for trading between cryptocurrencies, which makes it the second cheapest option after our pick, FTX.

High leverage KuCoin offers up to 100x leverage for futures trading, much higher than peers like FTX, who cap leverage at 20x.

No fiat deposit / withdrawal option Surprisingly, KuCoin does not offer any option to deposit or withdraw fiat currencies on the platform. All the options available on KuCoin for converting cash to crypto involve 3rd parties and are relatively expensive, costing from 1% to 4%+, usually around 2-3.5%. You can either use the third party route to buy crypto with cards or you can fund the account by transferring coins (incl. stablecoins) from your existing wallets to KuCoin.

Withdrawals also need to be in crypto form and converted to fiat on another exchange.

Gamified Trading KuCoin has a few features that try to gamify trading. For example, there is the KuCoin Win option which runs a lottery (or raffle) and Futures Brawl, where you bet against another player in predicting whether the price of a coin will rise or fall next. There are also incentives to deposit funds, do your first trade etc.

Trading Bot KuCoin also offers a trading bot that is positioned as a tool to make passive income. These appear to trade volatile coins algorithmically to generate some profit. The best short term returns of each bot for the day are quoted on APR basis.

Is KuCoin licensed?

KuCoin does not seem to have any licenses anywhere in the world. Their website does not list any licenses and we did not find their name in the MAS’ list of either exempt or non-exempt institutions for DPTs.

In our research we did not find any reason to believe that they are currently in the process of applying for any licenses.

Is KuCoin safe?

KuCoin has a relatively short operating history, having been launched in Sep 2017. It was hacked in Sep 2020 with user funds worth US$285mm stolen from the hot wallet (i.e. the portion exposed to the internet). The management has said that of the stolen amount, $240mm were recovered eventually while KuCoin replaced the rest from their insurance fund. As a result they claim no users suffered any losses as a result of the hack.

The ability of KuCoin team to recover bulk of the funds and their willingness to make the remaining users whole is reassuring. However we would have felt more comfortable if they had or were trying to get some license from reputed regulators. That does not seem to be the case.

There is also relatively limited information about the founders of the company on the internet or KuCoin website. While their names are public, we couldn’t find much about their backgrounds.

We could find only one interview of Founder Michael Gan and while a number of founding team members have LinkedIn profiles, the information on those profiles is quite limited too. There seems be little independent coverage of the team although we found a few sponsored articles in press by the current CEO, Johnny Lyu.

KuCoin also appears to have moved its base from Hong Kong to Singapore to Sychelles and was involved in some dispute on its domain name. We did not find any details on how that resolved.

There are few security disclosures on KuCoin website. There is no dedicated security page and the FAQ section on Security has only 3 articles that do not cover their security practices. We also could not find a feature to whitelist addresses for withdrawal of funds. This is a standard feature on most platforms.

This combination of lack of information on the team, their security practices and lack of licenses was a major factor in our decision to recommend other exchanges as our top picks, despite the popularity of KuCoin and the large number of coins listed.

What fees does KuCoin charge?

For trading between different cryptocurrency pairs, KuCoin was the second cheapest exchange, only behind our pick, FTX. They charge 0.10% for all such spot trades, while the fees for futures trading are even lower at 0.02% for makes and 0.06% for takers.

Makers are typically limit or other orders that are not immediately executed while takers are orders that are immediately executed, such as market order.

KuCoin does not charge any fees for crypto deposits although since these deposits are likely to come from another exchange, you may still incur a transaction cost. Fiat transactions are only possible using credit cards and involve third parties. These are also relatively expensive. We found quoted spreads between 1-4% for buying coins in our testing.

There are fees and minimum transaction sizes for withdrawals. We found these to be in line with most peers although they vary by coin and some coins could be more expensive than others. Its also worth noting that both our picks, FTX & Gemini, offer free withdrawals.

What tools & data do KuCoin offer?

Like most other crypto exchanges, the KuCoin trading platform is focused largely on trading but it does have some tools we did not find in most other exchanges e.g. trading bots.

You can check prices of various coins and instruments, look at customizable charts, examine your positions, historical and open trades and P&L. You can do minor customization of the trading layout.

Some online brokers offer a fair bit of data and analytical tools to evaluate stocks. None of the crypto exchanges, including KuCoin, offer anything similar to evaluate the coins or other instruments trading on their platforms.

Spot Coverage & Liquidity KuCoin lists more than 600 coins on their spot exchange. That is the 2nd highest number of coins listed among the exchanges we reviewed.

We also compared the coverage of the top 200 coins by market value. 130 out of the top 200 coins are listed on KuCoin and 40 out of the top 50. It was the only exchange we looked at to list all of the 10 largest coins by market value.

KuCoin has had daily spot trading volume averaging around US$2.7bn over the last 3 months. At the time of writing, this put KuCoin in the top 10 exchanges globally for daily traded value.

Futures Coverage & Liquidity KuCoin also lists futures on more than 100 coins. These are largely perpetual futures and these can be traded with up to 100x leverage and for lower fee. Unlike the usual futures in say stocks and indices, these futures do not need to be rolled over every month. This makes them quite convenient and cost effective option for getting leveraged exposure to various coins.

The daily trading volume for futures on KuCoin averaged around US$3.3bn in the last 90 days, again putting it in the top 10 globally.

Funding As mentioned above, KuCoin does not offer a cheap option to fund the account using fiat currencies. There is no wire transfer or FAST / PayNow option to fund the account using any fiat currency.

If you wish to use KuCoin to access the large number of coins they list, you must first open account at another crypto exchange and covert your cash to coins. Ideally this would be a stablecoin or another coin with low transaction and transfer fee at that exchange. You can then transfer these into your KuCoin wallet.

We found the USDT transfer to be easy and fast from our account at FTX, but depending on the first exchange you choose, this may be different for you.

You could purchase cryptocurrencies with credit card via a third party like like Banxa or Simplex but chances are you would be paying a very high fee or spread for that transaction. In our testing this varied between 1%-4% and averaged around 3-3.5%. This seems to have come down in recent months with specific providers like Banxa, while other remain high.

You can also buy coins on the P2P exchange. We only saw availability of USDT on that platform and the pricing was quite high and liquidity limited.

Withdrawal While withdrawals on KuCoin are also simple, they can be expensive depending on the coin and network. A 500 USDT withdrawal on ERC20 network was quoted a fee of 35 USDT. The same withdrawal using the TRC20 network had a fee of 1 USDT. BTC withdrawals are 0.0005 BTC or about US$20.

Considering that many good exchanges offer free (or partially free) withdrawals we found this another big hurdle for choosing KuCoin.

Trading The trading interface on KuCoin works similar to other platforms. There are different pages / tabs for trading spot and futures with minor differences in settings.

The trading interface shows a chart of the chosen instrument, the order book, recent trades and the order widget. KuCoin only offers 4 basic order types – limit, market, stop limit and stop market.

Similar to some stock brokers, KuCoin also offers Trading Bots. These are trading algorithms with customizable parameters that trade automatically on your behalf.

KuCoin positions Trading Bots as a way to generate passive income and highlights extremely high returns (typically 1000s of % APR) on each. However these returns are based on annualizing  a very short term return on the highest return that any user seems to have achieved on that day.

In our view this is quite misleading since this selects only the highest return for the day (instead of average or median) on any amount of investment (the minimums are usually $25) in any coin to highlight.

Margin Lending & Borrowing KuCoin also offers a market for lending and borrowing coins for periods of 7, 14 and 28 days. The rates and liquidity vary by currency. You place an order to lend by specifying the rate you want for a duration and get in the queue. KuCoin indicates a priority rate for each currency and duration, which is usually indicative of where the market is.

The interface for borrowing and lending in similar but surprisingly the page for borrowing only shows the daily rate while the page for lending shows both the daily and implied annual rates. This is similar to the practice at many exchanges.

In our comparison of lending / borrowing rates across exchanges, we did not find any consistent pattern to suggest one venue was better than others.

KuCoin Earn This feature supposedly allows you to invest through professional asset managers to earn stable returns. We believe this is largely an option to stake your coins but there may be an overlay of other mechanisms.

Other Features KuCoin also offers features called KuCoin Pool and CloudMining which are options to participate in mining of Proof of Work blockchains – similar to Staking for Proof of Stake blockchains.

Reports KuCoin offers a few basic reports on the platform to allow you to track your P&L, trade history and positions.

Is KuCoin easy to use?

KuCoin platforms are not hard to use although we occasionally struggled to locate the features we were looking for. Overall the interface is logically organized and easy to navigate. The mobile app is also well organized compared to peers and easy to use.

We don’t think any crypto exchange offers a user experience that is materially better than others but still KuCoin does appear to be relatively more user friendly than most exchanges we tested.

How is KuCoin Customer Service?

KuCoin customer service is fairly average in comparison to other crypto exchanges. We could not find a helpline number and while there is a chat option, we could not get past the bot. You can submit questions on the Helpdesk page. We received accurate and useful responses to our questions within 24 hrs