Singapore Court Locks Crypto Exchange KuCoin’s Web Domain

KuCoin.com, the primary web domain of cryptocurrency exchange KuCoin, has been locked since the end of March by order of the High Court of Singapore.

The court issued a temporary injunction on March 24 barring KuCoin from moving its assets, including its website, from the country. A March 30 email from domain registrar GoDaddy provided to Cointelegraph shows that GoDaddy is complying with the court order.

How the exchange will cope with its primary web address locked down is one of many unanswered questions about KuCoin as the company undergoes a major corporate restructuring and faces legal challenges around the globe.

Phantom investments in KuCoin

Founded in September 2017, KuCoin boasted five million users in 100 countries within a year. Just over twelve months later, on November 14, 2018 KuCoin claimed it had secured $20 million in Round A funding from venture capitalists – IDG Capital, Matrix Partners and Neo Global Capital. But at least one of those investments did not materialize. 

At the time of the announcement, KuCoin CEO Michael Gan stated:

“The combined forces of IDG Capital, Matrix Partners and Neo Global Capital will help KuCoin grow substantially, expand understanding and adoption of cryptocurrency for millions of potential users, and help these users more efficiently find the best products available in the crypto-world no matter where on the planet they may exist.”

IDG Capital boasts notable cryptocurrency companies such as Coinbase and Ripple in its investment portfolio. As of publication of this article, KuCoin appears as a portfolio company on the websites of both IDG Capital and Neo Global Capital, but does not appear on Matrix Partners’ website.

And yet, despite what appears on Neo Global Capital’s website, an individual with knowledge of the matter told Cointelegraph via email that NGC in fact never made any investment in KuCoin. Rather, the firm only gave logistical support to the fledgling exchange.

Representatives of IDG Capital and Matrix Capital did not respond to Cointelegraph’s requests for comment.

Many questions about corporate restructuring

On March 17, 2020, KuCoin issued a press release from Victoria, the capital city of the Seychelles, describing a sweeping corporate restructuring. It announced the establishment of KuGroup, which “consists of three business groups, namely KuCoin Global, KuCloud and the KuChain & KCS Business Group.”

What appears to be a banal corporate announcement actually describes the culmination of far-reaching changes at KuCoin. The corporate restructuring also leaves the ownership and regulatory jurisdiction of the exchange in question at a time when it is facing mounting legal problems, both in Singapore and the United States.

KuCoin’s March 17 announcement came just six days before the U.S.-based law firm Schall announced its investigation into KuCoin and another exchange accused of “false and misleading statements to account holders” in a pending class action. The exchange is also the subject of a separate class action bought by Chase Williams in the Southern District Court of New York regarding the selling of unregistered securities.

Meanwhile, the court order that prevents KuCoin from moving its domain to another provider, and potentially outside the jurisdiction of the Singaporean Court, involves a cybersecurity provider who is suing the cryptocurrency exchange. More details on that story are expected to emerge in the coming days.

On October 14, 2019, just days after arbitration commenced in the lawsuit against KuCoin in Singapore, directors of the Singapore-based entity PhoenixFin Pte Limited — the legal entity behind KuCoin and owner of the KuCoin.com domain — resigned. There was no public announcement made about these resignations, but records filed with Singapore's Accounting and Regulatory Authority show that co-founders Michael Gan and Tang Ke, as well as Lian Meng, a representative of financial backers IDG Capital, all resigned as directors of PhoenixFin Pte Limited. None of them responded to interview requests from Cointelegraph.

Just two days later, on October 16, 2019, the KuCoin name and logo trademark was transferred from MEK Global, a Seychelles-based entity that had previously inherited the trademark from PhoenixFin Pte Limited. The trademark ended up with another Seychelles-registered entity, FortuneIcon, which has the exact same physical address as MEK Global.

For at least the past year, KuCoin users were turning to Reddit to understand the company’s corporate structure, lacking clarity from the exchange itself. In the absence of a response from any of the entities or individuals mentioned, it is unclear why this far-reaching corporate restructuring took place or why the company’s trademark was reassigned.

Who is You?

With the co-founders of KuCoin and PhoenixFin Pte Limited no longer at the company, new directors such as Chinese resident You Au were appointed. On November 20, 2019 the ownership of PhoenixFin Pte Limited was transferred from PhoenixFin Limited, a Cayman-based holding company, to You Au. He had been appointed to the board at the time of the October 14 corporate restructuring, but his prior relationship to KuCoin is unclear. He is not mentioned on the exchange’s website, in any of its marketing material, in the March 17, 2020 press release, or in the 2017 White Paper which described the exchange.

Little is known about You Au, except that he is 28 years old and officially a resident in Mianyang, a city in the Sichuan province of China. Although Johnny Lyu, the CEO of Phoenix Pte Limited, was appointed CEO of KuCoin Global on March 17, the ultimate owner of KuCoin Global seems to be You Au. If he is indeed a Chinese resident, he would be subject to People’s Bank of China regulations that forbid the trading of Bitcoin or other cryptocurrencies, conducting initial coin offerings, and the operation of crypto exchanges.

Neither You Au nor Johnny Lyu responded to Cointelegraph’s requests for comment.

Where on the planet is KuCoin?

In 2018 KuCoin responsed to an "empty office" claim regarding a Hong Kong address, asserting that its operational headquarters were in fact in Singapore. The company’s response stated:

“In fact, KuCoin’s public address in Hong Kong is merely a mailing address of one of KuCoin’s many subsidiary companies. KuCoin Headquarters is in Singapore. KuCoin has always been a global firm, with over 300 employees and four major offices in China, the Philippines, Singapore, and Thailand.”

The exchange’s current geographic situation is less clear. On its website, the company profile states it “operates in the Seychelles,” a jurisdiction not mentioned in its 2018 blog post. Unlike Binance, Coinbase and Ripple, KuCoin did not file with the Monetary Authority of Singapore to request a deferral of the requirement to operate without a payments license. Such deferrals allow those companies to operate as payments service providers without a license through July.

Without a license or a deferral, KuCoin cannot legally operate in Singapore. It remains unclear whether KuCoin is nonetheless operating in Singapore or if the exchange is in fact now operating elsewhere.

No answers, despite our questions

Cynical journalists love the famous quote of Germany’s 19th century “Iron” Chancellor, Otto von Bismarck: “Nothing is confirmed until it is officially denied." But despite repeated requests to KuCoin, its former directors and its current directors, all have refused to offer any comment for this article.

In the absence of clarity from any of the individuals mentioned in this article, or from the company itself, users of the KuCoin cryptocurrency exchange will likely want answers on whether they are sending their money to Singapore, the Seychelles, China — or anywhere else in the world.