KuCoin (CRYPTO:KCS), a prominent crypto exchange, has reported a significant 20% decrease in user-held reserves, as revealed in its latest proof-of-reserves (PoR) report.

This decline coincides with a surge in user withdrawals and heightened regulatory scrutiny from the US government, following allegations of anti-money laundering violations.

The PoR data indicates a notable drop in key cryptocurrency holdings, with BTC (CRYPTO:BTC) down by 25.4%, ETH (CRYPTO:ETH) by 21.91%, and USDT (CRYPTO:USDT) by 21.5% compared to the previous report in February.

The surge in withdrawals from KuCoin, totaling over $1.2 billion, is attributed to concerns raised by New York's attorney, alleging KuCoin's involvement in a multibillion-dollar criminal conspiracy.

In response to the challenges, KuCoin has announced a $10 million token airdrop to compensate affected users and express gratitude for their loyalty during these turbulent times.